The effect of adopting the S&P⁵⁰⁰ indicators for transparency in accounting information risks and their reflections on the firm value

An applied study on a sample of private commercial banks listed on the Iraq Stock Exchange

PhD thesis submitted

To

The Council of the College of Administration and Economics at the University of Karbala. In Partial Fulfillment of the Requirements for the Degree of Philosophy Doctorate in Accounting

By

Mohammed Abd-Ali M. A. AL- Fattehallah

Supervised by

Prof. PhD.  Mohammed Huweish Allawi Al-Shujairi

This research aims to test and analyze the relationship between the level of transparency of financial reporting and the risks of accounting information and its reflections on the value of the firm, for a sample of private commercial banks listed in the Iraq Stock Exchange. The transparency of financial reporting was evaluated using the S&P⁵⁰⁰ indices, and the level of accounting information risk was assessed using each of the S&P⁵⁰⁰ indices, which represent the risks of information that is fragmented, reduced, or unanswered, within the requirements of the S&P⁵⁰⁰ indices, which consist of 98 requirements. As well as evaluating those risks using the model (Ohlson, 1995) for evaluating the appropriateness of the value of accounting information, where the risks of accounting information are considered an inverse of the appropriateness of the value of accounting information in the context of expressing the appropriateness of accounting information in its relationship to market stock prices. The value of the firm was also evaluated using Tobin’s Q model.

For the purpose of achieving the objectives of the research and testing its hypotheses, the applied approach was used to evaluate the research variables in a sample of commercial banks listed on the Iraq Stock Exchange, which amounted to (10) selected banks for the period (2016-2021). The inferential statistical method was also used in testing and analyzing research hypotheses, using Excel and SPSS²⁶ programs.

The research reached a set of conclusions, the most important of which was the low level of transparency in private commercial banks, especially in the two main categories of (S&P⁵⁰⁰) indices: ownership structure and shareholder rights, and the board of directors and management procedures, as both had the largest share of the risks and this impact was reflected on the value of banks in the market. In addition to the inflation of the number of banks in a way that does not correspond to the local activity of banks in the Iraqi market, which indicates a high risk of accounting information. The research concluded with a number of recommendations, the most important of which was working to oblige banks to expand disclosure and work with the mechanisms of S&P⁵⁰⁰ indicators and apply them annually to follow up the level of transparency development in them to reduce the risks of accounting information and obligate banks to work to respond to all requirements of the original scale and develop it and overcome stereotypes in disclosure and limit private information to maximize its quality, improve its suitability for investment decision makers, and improve its positive impact on the value of the establishment (the bank).

The effect of adopting the S&P⁵⁰⁰ indicators for transparency in accounting information risks and their reflections on the firm value

An applied study on a sample of private commercial banks listed on the Iraq Stock Exchange

PhD thesis submitted

To

The Council of the College of Administration and Economics at the University of Karbala. In Partial Fulfillment of the Requirements for the Degree of Philosophy Doctorate in Accounting

By

Mohammed Abd-Ali M. A. AL- Fattehallah

Supervised by

Prof. PhD.

 Mohammed Huweish Allawi Al-Shujairi

This research aims to test and analyze the relationship between the level of transparency of financial reporting and the risks of accounting information and its reflections on the value of the firm, for a sample of private commercial banks listed in the Iraq Stock Exchange. The transparency of financial reporting was evaluated using the S&P⁵⁰⁰ indices, and the level of accounting information risk was assessed using each of the S&P⁵⁰⁰ indices, which represent the risks of information that is fragmented, reduced, or unanswered, within the requirements of the S&P⁵⁰⁰ indices, which consist of 98 requirements. As well as evaluating those risks using the model (Ohlson, 1995) for evaluating the appropriateness of the value of accounting information, where the risks of accounting information are considered an inverse of the appropriateness of the value of accounting information in the context of expressing the appropriateness of accounting information in its relationship to market stock prices. The value of the firm was also evaluated using Tobin’s Q model.

For the purpose of achieving the objectives of the research and testing its hypotheses, the applied approach was used to evaluate the research variables in a sample of commercial banks listed on the Iraq Stock Exchange, which amounted to (10) selected banks for the period (2016-2021). The inferential statistical method was also used in testing and analyzing research hypotheses, using Excel and SPSS²⁶ programs.

The research reached a set of conclusions, the most important of which was the low level of transparency in private commercial banks, especially in the two main categories of (S&P⁵⁰⁰) indices: ownership structure and shareholder rights, and the board of directors and management procedures, as both had the largest share of the risks and this impact was reflected on the value of banks in the market. In addition to the inflation of the number of banks in a way that does not correspond to the local activity of banks in the Iraqi market, which indicates a high risk of accounting information. The research concluded with a number of recommendations, the most important of which was working to oblige banks to expand disclosure and work with the mechanisms of S&P⁵⁰⁰ indicators and apply them annually to follow up the level of transparency development in them to reduce the risks of accounting information and obligate banks to work to respond to all requirements of the original scale and develop it and overcome stereotypes in disclosure and limit private information to maximize its quality, improve its suitability for investment decision makers, and improve its positive impact on the value of the establishment (the bank).