The Impact of Applying Accounting Standards on Corporate Governance in the State of Libya

Abstract

This study aims including their characteristics, advantages, and disadvantages. It further investigates the impact of accounting standards on corporate governance and explores the importance and implications of implementing such standards in Libyan companies. The central research question addressed is: What is the impact of applying accounting standards on enhancing corporate governance and its reflection on decision rationalization? A descriptive-analytical methodology was employed, and the study was conducted in 2024. The results indicate that corporate governance and its mechanisms—represented by the board of directors, audit committees, and internal auditing—significantly influence investors’ decisions. The findings highlight the essential role of the board of directors in establishing sound governance practices and setting related policies. The presence of audit committees contributes significantly to the enforcement of governance principles, while effective internal auditing reduces financial information manipulation. The provision of reliable and accessible information is crucial for investment decision-making in capital markets. The study recommends enhancing the training and efficiency of financial analysts and auditors in providing advisory services and analytical reports on expected profits, defining the concept and dimensions of accounting information quality about investor decision-making, and improving the relevance, comparability, reliability, and consistency of information in financial reports. Emphasis is placed on maintaining high-quality information to avoid reliance on external sources and ensuring the timely and honest disclosure of both financial and non-financial information.