Financial restatements and corporate life cycle: evidence from Gulf Cooperation Council (GCC) countries

Purpose This study aims to examine the relationship between financial restatements and the corporate life cycle stages of publicly listed firms in the Gulf Cooperation Council (GCC) countries. The goal is to understand how different stages of organisational development affect the quality of financial reporting. Design/methodology/approach The study uses a dataset comprising 2,254 firm-year observations from GCC-listed companies from 2011 to 2018. Regression analyses are conducted to evaluate the relationship between firms at the maturity stage and the likelihood of financial restatements. Robustness checks are performed using alternative measures and model specifications. Findings The findings reveal a significant and negative relationship between financial restatements and firm’s maturity. Mature firms are less likely to issue financial restatements, consistent with both agency theory and the resource-based view. Furthermore, the study examines the moderating effects of corporate debt and Selling, General and Administrative (SG&A) expenses. The results show that the negative association between financial restatements and firm’s maturity is more pronounced in firms with higher debt and greater SG&A costs, highlighting the role of external monitoring and efficiency of resource allocation in the quality of financial reporting. Originality/value This paper extends the application of firm life cycle theory to an emerging market context. It offers important policy implications by highlighting the need for stage-specific regulatory oversight and emphasising the role of organisational development in mitigating financial reporting risks.