An evaluation of financial statement quality in pre-versus post-IFRS-7 implementation: the case of Iraqi banking industry

Abstract

This study compares Iraqi banking financial statements before and after IFRS-7 financial instruments disclosure. “Nijmegen Centre for Economics (NiCE)” qualitative content analysis was used to assess financial statement quality, which was measured using NiCE disclosure index. This study analysed data using a paired sample test to meet its goals. After IFRS-7, financial reporting quality is represented by 2016–2018. Before IFRS-7, it was represented by 2013–2015. In addition, the OLS regression analysis was implemented to assess hypotheses, incorporating data from 24 Iraqi institutions. The univariate analysis (t-test) and OLS regression showed that IFRS-7 improves financial statement “relevance, faithful representation, comparability, and timeliness”. No correlation was found for “understandability”. This study is the first to use Iraqi data and the most recent disclosure index to test the relationship between financial figure quality before and after applying the IFRS-7 financial instruments disclosure standard in developing countries. The results help regulators and policymakers regulate IFRS in Iraq and suggest policy changes to ensure compliance. The findings have major implications for business and policy that executives, lawmakers, and stockholders should consider. This study is applicable to ME countries that share comparable institutional, cultural, and accounting framework characteristics.

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