title: The usefulness of corporate narrative reports for decision-making and the institutional factors that influence these disclosures: the case of Saudi Arabia
Creators: name: Alshahrani, Fatimah Saad
Publisher: name: University of Reading
Year: 2024

description: There is considerable growth in narrative disclosure in developed countries. However, 
there is still relatively little research on accounting narratives in annual reports from the 
users' perspective in the developing world, especially in the case of Saudi Arabia. This 
study therefore examines the use and usefulness of narrative reports for reporting and 
decision-making in the Kingdom of Saudi Arabia (KSA). Consequently, explored is 
constituents’ understanding of the narrative concept, the use of narrative disclosure, and 
the section(s) of most specific interest to users. However, this study is not limited to 
capturing individual perspectives of the use and usefulness of narrative disclosure, but 
also investigates the empirical literature, regarding institutional factors that affect the 
provision of and need for voluntary disclosure. 
A qualitative interpretive methodology was adopted, in order to fully understand the 
phenomenon from an individual perspective and observe the historical and cultural 
context of narrative reporting. Semi-structured interviews were employed as the data 
collection method, conducted with a sample of Saudi shareholders, investors, financial 
analysts, creditors, certified accountants and auditors, CEOs and managers, regulators, 
and academics, whereupon the researcher was able to interact with the participants 
directly to examine the phenomenon in greater depth. 
It was found that in the early stages of narrative disclosure in the Saudi market, the Saudi 
participants wished for more than mere financial statements, expressing a need for 
substantially more non-financial information such as the nature, segments, lines, 
activities, strategies, future prospects, and risks of a company, rather than historical 
disclosure alone. Thus, the importance and effectiveness of narrative reports for 
enhancing the stakeholders’ ability to anticipate how the company will perform in future 
was explicitly recognised. This would ultimately improve stakeholders’ decision-making. 
However, the Saudi accounting regulations, the nature of Saudi culture and the Saudi 
market, the level of accountancy awareness and education, and country-specific factors 
(users' awareness and beliefs, technology, media, Islamic religion) appear to have had a 
considerable effect on Saudi disclosure practices, preventing narrative reports from being 
useful. Therefore, this study should be considered as an attempt to improve the usefulness 
of narrative reporting for users of narrative reports in Saudi Arabia. 
Overall, this research contributes to the existing body of knowledge concerning the 
relevance of narrative disclosure for the benefit of businesses and the broader accounting 
society. The ultimate purpose of this is to establish a better accounting system and 
accounting society in Saudi Arabia. It is also expected to help develop a vision and 
strategy to encourage faculties to work on the regulation of narrative disclosure within 
the Saudi accounting system, thereby reflecting positively on best practice and the wider 
society. Those drafting the regulations and financial reporting preparers will also benefit 
from the results of this research, as it should enhance their awareness of the importance 
of narrative disclosure.