International Financial Reporting Standards and Their Relevance to the Gulf Countries

From the beginning of the twenty-first century, the Gulf countries have been switching from state-owned business entities to private-market-oriented firms and have become a significant part of the global business environment, as globalization has become a reality rather than a choice. As they compete in the global market, capital should move freely from one country to another; capital markets of the Gulf countries should meet, at least, the minimum financial reporting, disclosure, and transparency requirements at the global level. However, local and domestic investors may suffer due to the lack of comparable financial statements between companies of different countries. This can seriously affect the analysis of financial statement of different countries for making investment and financing decisions. In this case, do foreign investors require all Gulf, Asian, European countries, and the rest of the world to have uniform, standardized, or harmonized accounting principles? The answer depends on the meaning of every one of the three terms: financial reporting, disclosure, and transparency requirements.