Earnings Management for Private Banks and Effect on Market Value: Applied Research on Private Banks Listed in the Iraqi Stock Exchange.

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Earnings Management for Private Banks and Effect on Market Value: Applied Research on Private Banks Listed in the Iraqi Stock Exchange.

Abbas Fadhil Ali

Al-Furat Al-Awsat Technical University / Administrative Technical College

Abstract

This research aims to determine the effect of earnings management on the market value of stocks for private banks listed in the Iraqi stock exchange using some selected indicators that refer to the earnings management practices. To achieve this objective, the research applied the (Miller, 2009) model to evaluate the measurement of earnings management practices for three banking firms (Credit Bank of Iraq, Babylon Bank and Al-Mansour Bank) for the period between 2008-2011. These firms are listed in the Iraqi stock exchange of banks sector. The research adopted the inductive and deductive methodologies for hypothesis test, relying on a sample of the annual financial reports for banks and Iraqi stock exchange, to find the effect of earnings management on the market value of stocks of the studied banks. The most important conclusions of the research are: 1.Adopting the earnings management policy by the economic unit that have an impact on the prices of traded stocks in the Iraqi stock exchange. This is proved through analysis, which showed the effect of earnings management on the market value of stocks.2.The earnings management policy applied by the economic units have influenced the investment decisions taken by these units because of the influence of stock prices of the earnings management policy.The research also produced some recommendations as below:1.Commitment of all banks by the due time for submitting the annual reports to the Iraqi stock exchange which have an impact on stocks market value and securities which affect the user’s decisions.2.Adopting the market value as an indicator for the whole unit management considering the external impacts which is the important for the earnings management policy and volume of trading and current political situations.

DOI:10.52113/6/2019-9-3/54-70

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