Abstract

This article investigates the impact of mandatory IFRS adoption on transparency and governance in Saudi Arabia's NOMU parallel market. The primary aims of this study are to assess the impact of adopting IFRS on corporate transparency and governance, as well as identify the factors contributing to these effects. This study focuses on NOMU, a platform catering to smaller and growing businesses, rather than the Tadawul All Share Index. The research on the implementation of IFRS spans from 2010 to 2022. The NOMU parallel market dataset includes 118 enterprises that exhibit resilience and representation as of October 26, 2023. The effects of adopting IFRS on transparency and governance can be examined using a large dataset and an econometric model. Numerous notable coefficients and associations were observed. The adoption of IFRS contributes to increased transparency in earnings for entities following international accounting standards. A negative correlation between the governance index and the adoption of IFRS by entities shows that those with stronger governance structures have a lower propensity to do so. Larger corporations tend to favour the adoption of IFRS. The inverse relationship between profitability and IFRS adoption implies that less profitable entities may choose to adopt IFRS to enhance their governance practices. Furthermore, the expansion of a company positively influences the likelihood of IFRS adoption. Two new components are added in this study. This paper explores the adoption of IFRS in Saudi Arabia's NOMU parallel market for smaller and growing firms. This theory improves business writing. The report gives investors, corporations, and governments vital insights. Transparent financial reporting may boost IFRS adoption. A CEO can employ IFRS based on company size, earnings, and growth. Transparency and growth may affect investment strategy with IFRS. This report impacts Saudi firms. When implemented with authorities, IFRS can boost business transparency and responsibility. CEOs might choose IFRS for commercial benefits. IFRS allows investors pick transparent, profitable firms. This study gives theoretical and practical insights to emerging market IFRS adoption talks.