Emirates Airlines’ Accounting Principles and Business Performance


Listed companies should present a true picture of their financial performance to investors. However, some arguments suggest the financial statements developed by these companies oversimplify their financial performance and are not objective. These concerns have been exacerbated by the ongoing COVID-19 pandemic, which has ravaged industries due to restrictions on travel and social gathering. Therefore, the extent of the economic effects of the crisis on corporate performance is yet to be fully understood. Using Emirates Airlines as a case study, this paper discusses concerns suggesting that accounting oversimplifies financial performance and fails to reflect objectivity.

Role of Annual Reports in Simplifying Financial Performance

Companies often develop their financial reports as an indicator of their performance within a specific time. Relative to this statement, Preston, Wright, and Young (1996), say, “Annual reports are a visual medium through which corporations represent and constitute themselves” (p. 115). The role of accounting in presenting the true picture of corporate performance is especially poignant in understanding the ravaging effects of the COVID-19 pandemic on economies. However, industries have been affected disproportionately with the airline sector bearing the biggest brunt (Atay, Eroğlu and Ulusam, 2021). Relative to the importance of financial reporting, Emirate’s balance sheet for the year 2019/2020, highlighted in appendix 1, and its half-year performance, outlined in appendix 2, allows investors to get a holistic picture of the company’s financial performance before and after the COVID-19 pandemic was reported (Emirates Group, 2021a; Emirates Group, 2021b). These financial statements are simplified into relevant bits of financial data that investors could use to make judgments about the overall performance of the airline.

The simplification of financial information could be traced to the organizational and institutional rules governing financial reporting, such as the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), which are mentioned by Loyeung et al. (2016), Dichev and Zhao (2019). These guidelines provide a standardized way of presenting financial reporting that forces companies to exclude or include certain aspects of their financial performance to comply with these rules. Therefore, there is a degree of oversimplification of data to fulfill preconditions set by the above-mentioned rules of reporting. However, it should not be misconstrued that this practice is aimed at misleading investors because the purpose of financial reporting is to allow companies to focus on commonly agreed aspects of their business performance. There is also a degree of societal and community obligations that underlie financial reporting that equally have to be observed in financial reporting because companies prepare their financial statements to reassure the investment community that they are worthy of their capital. Cooper and Weber (2021) support this assertion by saying that financial reports may be used to recruit new investors, partners, and employees. These goals often affect how financial reporting is undertaken.

Comprehensively, financial reporting standards explain how a company’s annual reports are designed to represent the true picture of its financial position. These documents are developed to represent the financial position of a firm within a specific period, thereby providing firms with a context for reviewing the performance of an organization. For example, the recently released financial statements for Emirates Airlines highlight the firm’s financial performance during the pandemic period. Therefore, the statement made by Wright and Young (1996) is true because financial reports outline a medium through which companies can effectively represent and constitute themselves.

Objectivity of Accounting

The role of accounting in describing a company’s financial performance has often been characterized by debates regarding the objectivity of its procedures in representing the true financial position of a company. These issues have been marred by concerns regarding the extent that which the discipline holistically captures all aspects of financial reporting. According to the Financial Accountancy Organization (2020), objectivity in the profession is achieved when financial information is developed using unbiased evidence. Stated differently, financial information should be developed using reliable data, as opposed to the subjective opinions of accountants who use them. However, some people believe that accounting is not always objective as it contains subjective aspects of corporate governance (Jones and Stanton, 2021). Consequently, they create the perception that the aura of objectivity is misleading.

Underlying this skepticism is an understanding that accounting chooses to reveal or conceal aspects of a company’s performance, thereby reflecting a choice of what to disclose and what not to reveal to the public. An analysis of the financial reports of Emirates Airlines highlighted in this document reveals that, while this statement may have some merit, excluding certain bits of financial information is not intentional or malicious, but rather a design flaw associated with the rules of developing linked documents. For example, financial statements are prepared to reflect a company’s performance within a specific time window, thereby omitting information that may be pertinent to the same period but relevant to investors’ decision-making processes.

Emirate’s 2019/2020 financial statements highlight the above concerns because they do not reflect the ravaging effects of the COVID-19 pandemic, albeit having affected the airline’s operations during the same period. Indeed, the World Health Organization (2020) designated the health crisis as a pandemic in 2020 and countries responded by grounding air transportation almost immediately. This action led to a near shut-down of the Emirate’s operations, thereby leaving only cargo transportation as the only viable business for the airline at the time (Emirates Group, 2021a; Emirates Group, 2021b). The airline’s financial statements fail to reflect these significant events and their effects on the company’s viability as a “going concern.” Feng (2020) espouses this statement when by suggesting that internal control deficiencies could yield such anomalies. Therefore, the 2019/2020 financial reports do not show a complete picture of the effects of the COVD-19 pandemic on the company’s performance.

It is only recently that the effects of these events were captured in the company’s financial records through the 2020/2021 half-year performance. This document was the first one to show the effects of the pandemic on the Emirate’s performance by disclosing that the airline’s revenue declined by 75% or $3.2 billion due to the effects of the COVID-19 pandemic (Emirates Group, 2021b). Looking at the financial reports for 2019/2020, the effects of the pandemic are not captured because, even though the pandemic was announced during this financial year, its effects on the firm’s financial reporting standards were not observed until 2021 (Emirates Group, 2021b). Although such information was pertinent to investors willing to inject capital into the business, they failed to provide them with adequate data regarding its impact on other aspects of corporate performance that may still be relevant to their decision-making processes. For example, supply chain disruptions and job losses that have an impact on the company’s performance are omitted from such documents. Several researchers affirm that these attributes of corporate performance have an impact on a company’s financial performance (Nag and Chatterjee, 2020; Arora and Bodhanwala, 2018; Weerathunga et al., 2020; Roy, 2016). Therefore, the data provided in such reports do not represent the full picture of the Emirate’s finances.

Concerns about the failure of financial statements to present a holistic understanding of corporate performance are also legitimized by the fixed nature of financial reporting standards adopted by Emirates Airlines. Therefore, an investor who simply relies on the 2019/2020 financial reports to decide on their business decisions in 2021 could be misled to think that the company has a good financial outlook. These gaps in financial reporting affirm the belief that current accounting practices could conceal aspects of a company’s financial performance and mislead investors into making decisions about present-day business decisions based on past or obsolete data.

Overall, the evidence espoused in this analysis reveals that accounting processes are products of a socially constructed reality. This outcome is realized because several people and circumstances are involved in financial reporting. Therefore, financial reporting is a product of the interaction between social and organizational actors. The institutional and cultural environment that characterizes an organization moderates the relationship between the two parties. Consequently, the outcomes of financial reporting processes should be construed to mean that the two sets of actors, coupled with the environmental attributes highlighted above, define how financial reporting is done.


The evidence highlighted in this document suggests that accounting allows companies to gain legitimacy, maintain harmony, and bolster their relationship with investors. Therefore, the profession should be understood as a process that creates a socially constructed rhetorical story about a firm’s performance, the soundness of its management structure, and its potential for tackling future problems.

Reference List

Arora, A. and Bodhanwala, S. (2018) ‘Relationship between corporate governance index and firm performance: Indian evidence’, Global Business Review, 19(3), pp. 675-689.

Atay, M., Eroğlu, Y. and Ulusam, S. (2021) ‘Investigation of breaking points in the airline industry with airline optimization studies through text mining before the COVID-19 pandemic’, Transportation Research Record, 4(2), pp. 1-10.

Cooper, L. A. and Weber, J. (2021) ‘Does benefit corporation status matter to investors? An exploratory study of investor perceptions and decisions’, Business and Society, 60(4), pp. 979-1008.

Dichev, I. D. and Zhao, J. (2019) ‘Comparing GAAP with NIPA earnings’, Journal of Accounting, Auditing and Finance, 7(2), pp. 1-11.

Emirates Group. (2021a) Financial transparency: annual reports. Web.

Emirates Group. (2021b) Emirates Group announces half-year performance for 2020-21. Web.

Feng, N. C. (2020) ‘The impact of non-compliance and internal control deficiencies ongoing concern audit opinions and viability of nonprofit charitable organizations’, Journal of Accounting, Auditing and Finance, 35(3), pp. 637-664.

Financial Accountancy Organization. (2020) Objectivity concept of accounting. Web.

Jones, M. and Stanton, P. (2021) ‘Negative accounting stereotype: Enron cartoons’, Accounting History, 26(1), pp. 35-60.

Loyeung, A. et al. (2016) ‘The cost of implementing new accounting standards: the case of IFRS adoption in Australia’, Australian Journal of Management, 41(4), pp. 611-632.

Nag, T. and Chatterjee, C. (2020) ‘Exploring linkages between corporate governance and business performance: does good corporate governance lead to enhanced business value?’, South Asian Survey, 27(1), pp. 37-61.

Preston, A. M., Wright, C. and Young, J. J. (1996) ‘Imagining annual reports’, Accounting, Organization and Society, 21(1), pp.113-137.

Roy, A. (2016) ‘Corporate governance and firm performance: a study of Indian listed firms’, Metamorphosis, 15(1), pp. 31-46.

Weerathunga, P. R. et al. (2020) ‘The relative effect of the growth of economy, industry expansion, and firm-specific factors on corporate hotel performance in Sri Lanka’, SAGE Open, 7(2), pp. 1-10.

World Health Organization. (2020) Rolling updates on Coronavirus disease. Web.


Appendix 1: Emirates Airline Balance Sheet

Emirates Airline Balance Sheet

Appendix 2: Emirates’ Half-Year Results for 2020/2021

Emirates’ Half-Year Results for 2020/2021

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