Abstract
This study aims to explore the relationship between sustainability reporting and the quality of financial reporting, as well as to examine the impact of the quality of corporate governance systems on this relation. The study measured the sustainability disclosure through the index consists of (46) elements. The quality of financial reporting was measured through three different indicators; are discretionary accruals, conservatism and information asymmetry. Empirical study is based on content analysis to examine the annual reports of a sample of 116 non-financial Saudi listed companies during the year (2015).
The Results showed that sustainability reporting is significantly associated with both discretionary accruals and information asymmetry, while it is not associated with conservatism. In addition, the quality of governance system appeared to be significantly affecting the relationship between the sustainability disclosure and the quality of the financial reporting. The study recommends Saudi capital market Authority to develop guides and models to improve the level of sustainability disclosure and encourage the listed companies to disclose this information through annual reports or stand-alone reports and to adopt good practices of corporate governance.
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