The Impact of Earnings Management on The Firm Value: An Applied Study In A Sample of Iraqi Private Banks

Abstract

Abstract:
The research aims to examine the impact of earnings management
practices on the firm value. The sample of study consists of 10 Iraqi
private banks listed in Iraq Stock Exchange using data collected from the
annual reports of the sample banks for the period between 2006 to 2015.
the software package Spss is used to examine the data and to infer the
conclusions. The results indicate that the earnings management practices
have an influence on the firm value the sample banks by conveying a
good image about the profitability power of the bank to the potential
investors. The results also indicate that the earnings management
practices stem from the flexibility that existed in the accounting
standards, which permit to accountants to choose among a several
alternatives of the measurement. In addition, the earnings management
represents an intentional intervention in the accounting and reporting
processes in order to change the perception of the stakeholders about the
reality of bank’s profitability, and in turn lead to increase market value of
the bank. The findings of this study can be used as guideline to investors
for detecting the cases in which the earnings numbers managed in order
to provide a real evaluation of the bank listed in stock markets.