The study aimed at revealing the nature of the relationship between foreign direct investment and the quality of the Arab financial reporting environment after adopting IFRS during the period 2007 - 2018. To study this relationship, the paper uses panel cointegration with a corresponding vector error correction model (VECM) to investigate in three main areas: Business impact of rules on FDI, FDI based on technology transfer, Prevalence of foreign ownership, by using the Eviews.7 program. The results showed a long-run relationship between the quality of the Arab financial reporting environment and the foreign direct investment in all indicators and the same period. This is the first study that we are aware of to directly examine this relation in Arab Economies, thus, this paper provides new empirical evidence in Arab Economies for increased resource allocation efficiency.