The impact of applying International Financial Reporting Standard "IFRS 13 Fair Value" on the financial performance indicators of Iraqi private banks

Abstract

Abstract:

research aims demonstrate the impact of applying International Financial Reporting Standard (IFRS) 13 on the financial performance indicators of Iraqi banks. It also examines the relationship between the fair value of bank shares and financial performance indicators under IFRS 13. To achieve these objectives, the research focused on the banking sector in the Iraq Stock Exchange, given that most banks began implementing IFRS 13 in early 2016. Data was collected for three years, both before and after the implementation of IFRS 13 "Fair Value," covering the period from 2013 to 2018. The research concluded that the coefficient of determination (R²) for applying IFRS 13 has significant predictive and explanatory power for financial performance indicators. It reached 0.909 before the standard's implementation and 0.838 after its implementation. The analysis of the correlation between the fair value of the shares of the banks in the research sample and financial performance indicators under IFRS 13 indicates a strong correlation. The International Financial Reporting Standard 13 (IFRS 13) fair value analysis revealed a multivariate correlation of 0.915, a positively significant value at a significance level of 0.01. This multivariate correlation indicates that both the fair value of the banks' shares in the research sample and their financial performance indicators, under IFRS 13 fair value, have good predictive power. The research recommends using fair value information to guide the bank's management and investment decisions, leading to increased operational efficiency and improved long-term indicators such as return on assets (ROA) and return on equity (ROE). However, given that fair value fluctuations can increase net income volatility, further analysis explaining the impact of these valuation-related fluctuations is recommended