1.1 Problem Statement
The problem statement of the report is the primary aspect of corporate governance principles to be adopted for ensuring accounting quality. With the increased element of considering generally accepted accounting principles, the neutral practices are followed with accounting principles and conservatism. Bankruptcy leads to violation of practices which results in fraudulent reporting. Therefore violating accounting principles may lead to bankruptcy which controls the authorities and activities of the board of directors or owners of the business (Rajab & Malik 2017). The study is based on the relationship between corporate governance and accounting conservatism of Saudi Arabian listed companies. Most reviews are manipulated and are flexible, based on accounting principles and objectives. Consequently, a business should ensure a tool that helps to control the administration and maintains a balance of governance and accounting quality. The study argues in terms of using corporate governance as a tool to manage the accounting system. The review ensures several questions to be answered in a meaningful manner. There is diversity in terms of principles of corporate governance and quality. The research questions such as
Is there an effect on corporate governance and accounting quality?
Is there a relationship between accounting principles and shareholder’s interest?
Is there a relationship between accounting conservatism and audit committees?
1.2 Research Objectives
The study aims to
Formulate the aspect of corporate governance about accounting quality while using them in the best manner and ensuring the relationship between accounting quality and corporate governance principles.
Identify the companies that work on corporate governance practices which leads to productive results of accounting conservatism (Abbas & Mohammadreza 2015). As such, the relationship is tested in terms of principles and aspects of accounting and success of the business.
Investigate the governance principles as and when adopted in the business in Saudi Arabian companies
Investigate whether the aspects and approaches of corporate governance will reveal the impact on the success of the accounting system
1.3 Significance of the study
The study is essential as it ensures the literature that investigates the effect of corporate governance on the accounting system for Saudi companies. There are Saudi companies that practice corporate governance principles and applications in the business to achieve Accounting quality. The study is significant as it encompasses and tackles the business problem effectively about the accounting conservatism used in Saudi companies. Therefore the study attempts to ensure governance principles that are used in the business environment and achieve contemporary accounting standards. The literature will present the importance of corporate governance regarding the role of accounting conservatism in the stock exchange.
1.4 Summary of Chapter
The study will attempt to provide information regarding the availability of corporate governance standards and principles in Saudi Arabian companies. The role of accounting conservatism principles impacts the significant attention of corporate governance and policies. The study highlights the procedures to be adopted to achieve accounting quality in terms of the financial report and financial statement of an organization listed in the Saudi Stock Exchange while applying corporate governance principles. Therefore, the level of conservatism in terms of economic reports is addressed with high reflective aspect and quality standards are discussed subsequently. Sound decisions are maintained on the Saudi Stock Exchange concerning governance principles and policies.