Managerial Ability, Earnings Quality and ISIS: Evidence from Iraq

International Journal of Emerging Markets 2021, doi:10.1108/IJOEM-08-2020-1012

Posted: 25 Oct 2021

See all articles by Ameneh Bazrafshan

Ameneh Bazrafshan

Imam Reza International University

Naser Makarem

University of Aberdeen

Reza Hesarzadeh

Ferdowsi University of Mashhad

Wafaa SalmanAbbood

Mustansiriyah University

Date Written: September 13, 2021

Abstract

Purpose - This study investigates the association between managerial ability and earnings quality in firms listed on the Iraq Stock Exchange and how the emergence of the Islamic State of Iraq and Syria (ISIS) influences the association.

Design/methodology/approach - This study uses a sample of firms listed on the Iraq Stock Exchange over the period 2012-2018. Managerial ability is quantified using data envelopment analysis, and earnings quality is measured by earnings restatement, earnings persistence, accruals quality, and earnings response coefficient. Panel regression analysis is used to examine the research hypotheses.

Findings - The findings indicate that managerial ability positively affects earnings quality of Iraqi firms, and that ISIS weakens the relationship between managerial ability and earnings quality. These findings are robust to the alternative measures of managerial ability, as well as to various approaches used to address endogeneity including propensity-score matching and a difference-in-differences analysis.

Originality/value - This study provides insight into the impact of managerial ability on earnings quality in an under-studied emerging market. Furthermore, this study broadens the existing literature about the financial consequences of a modern terrorist group, ISIS.

Keywords: managerial ability, earnings quality, emerging markets, Iraq Stock Exchange, ISIS

Suggested Citation

Bazrafshan, Ameneh and Makarem, Naser and Hesarzadeh, Reza and SalmanAbbood, Wafaa, Managerial Ability, Earnings Quality and ISIS: Evidence from Iraq (September 13, 2021). International Journal of Emerging Markets 2021, doi:10.1108/IJOEM-08-2020-1012, Available at SSRN: https://ssrn.com/abstract=3922530

Ameneh Bazrafshan (Contact Author)

Imam Reza International University ( email )

Felestin Square, Mashhad, 91735553 Iran
Mashhad, 91735553
Iran

Naser Makarem

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Reza Hesarzadeh

Ferdowsi University of Mashhad ( email )

Mashhad, 9177948974
Iran

HOME PAGE: http://Hesarzadeh.profcms.um.ac.ir/

Wafaa SalmanAbbood

Mustansiriyah University ( email )

Iraq

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