Impact of Managerial Ability on Accounting Conservatism and its Reflection on Firm Value: An Applied on Iraqi Banking Sector

المجلة: International Journal of Research in Management Studies (IJRMS)

سنة النشر: 2022

تاريخ النشر: 2022-12-01

The objective of the study is to measure the impact of managerial ability on accounting conservatism and its reflection on the value of the company in the Iraqi banking sector to achieve this aim, the research dealt with the community of banks listed in the Iraq Stock Exchange, which are (47) banks, until the closing year of 2021. As for the sample of this research, it was (8) banks, and a time series that extended from 2010 to 2019 was adopted. Quantitatively, the financial statements were measured, and the independent variable was measured by the managerial ability according to the data envelope analysis (DEA) technique, to determine the operational efficiency of the department in agreement (Herianti et al., 2021). As for the intermediate variable, the degree of conservatism was measured in the balance sheet based on the ratio of the market value of property rights to their book value (MTB-CON), and whenever the value was greater than (1). This indicates the presence of conservatism (Ammash, 2021), and the dependent variable is the firm value According to Tobin’s Q model. The research concluded: That managerial ability improves the firm value through the practice of conservative accounting policies. That managers with effective company management abilities can have more accurate decision-making processes. Thus, investor confidence will tend to increase, and the Firm value will be better in the eyes of stakeholders. The research recommended the need to pay attention to managers with capabilities, as these managers can use these capabilities to integrate conservatisms more efficiently in building the reputation and creating value for the banking company in the market.

Impact of Managerial Ability on Accounting Conservatism and its Reflection on Firm Value: An Applied on Iraqi Banking Sector

المجلة: International Journal of Research in Management Studies (IJRMS)

سنة النشر: 2022

تاريخ النشر: 2022-12-01

The objective of the study is to measure the impact of managerial ability on accounting conservatism and its reflection on the value of the company in the Iraqi banking sector to achieve this aim, the research dealt with the community of banks listed in the Iraq Stock Exchange, which are (47) banks, until the closing year of 2021. As for the sample of this research, it was (8) banks, and a time series that extended from 2010 to 2019 was adopted. Quantitatively, the financial statements were measured, and the independent variable was measured by the managerial ability according to the data envelope analysis (DEA) technique, to determine the operational efficiency of the department in agreement (Herianti et al., 2021). As for the intermediate variable, the degree of conservatism was measured in the balance sheet based on the ratio of the market value of property rights to their book value (MTB-CON), and whenever the value was greater than (1). This indicates the presence of conservatism (Ammash, 2021), and the dependent variable is the firm value According to Tobin’s Q model. The research concluded: That managerial ability improves the firm value through the practice of conservative accounting policies. That managers with effective company management abilities can have more accurate decision-making processes. Thus, investor confidence will tend to increase, and the Firm value will be better in the eyes of stakeholders. The research recommended the need to pay attention to managers with capabilities, as these managers can use these capabilities to integrate conservatisms more efficiently in building the reputation and creating value for the banking company in the market.