The Impact of Accounting Measurement of Financial Instruments at Fair Value on Stock Prices Changes for Banks:  an Empirical Study on Companies Listed on Iraqi Stock Exchange

Anssari, Majid Ahmed AL

doi:10.26668/businessreview/2023.v8i4.1234

Cited by 3 publications

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“…AL Anssari (2023) examine the relationship between the accounting measurement of financial instruments at fair value and changes in stock prices for banks listed on the Iraqi Stock Exchange, the study results show the relation between stock market prices and comprehensive income is higher than that the relation stock market prices and net income, and also the relation between stock market returns and comprehensive income is higher than that the relation stock market returns and net income.…”

Section: Introductionmentioning

confidence: 98%

The Impact of Micro Factors on the Performance of the Iraq Stock Exchange Index for the Period 2005-2021

Al-Sahlany,

Kadhum

2023

J. Professional Business Review

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Purpose: The purpose of this study is to determine the impact of some micro factors (liquidity and profitability factors) of the Iraqi banking sector in determining the return of the stock market represented by the return of the Iraqi financial market index using time series analysis according to the ARDL methodology for the period 2005-2021. Design/methodology/approach: The study adopted an econometrics analysis of time series using the ARDL (auto-regressive distributed lag) methodology for the period 2005-2021 to investigate the impact of some micro factors (liquidity and profitability ratios) in Iraqi banking sector listed in Iraq stock exchange market on market return (Iraq Stock Exchange Index as a benchmark). Findings: The results of this study reveal significant effects of the financial factors for micro factor on the Iraqi Stock Exchange index. It is interesting that the variables of banking liquidity showed a stronger logical relationship with the dependent variable in line with financial theory than the variables of banking profitability. The relationship between the micro factors model and the financial market index required a long-term adjustment equivalent to (0.2124) of the time needed to adjust to the balanced state according to the error correction equation. Research, Practical & Social implications: These results confirm the importance of taking into account micro-financial factors when making financing and investment decisions, as well as when evaluating the economic situation in the Iraqi banking sector. Understanding the impact of these factors and their relationships contributes to decision-making and enhances general forecasting of future economic volatility and risk management. Originality/value: This study provides valuable insights into the dynamics of the Iraqi financial market and highlights the importance of incorporating micro-financial factors into financial analyzes and investment strategies. The study recommends that future research should explore the complex links between macroeconomic factors and the financial market to gain a comprehensive understanding of the economic environment.

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Section: Introductionmentioning

confidence: 98%

The Impact of Micro Factors on the Performance of the Iraq Stock Exchange Index for the Period 2005-2021

Al-Sahlany,

Kadhum

2023

J. Professional Business Review

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The Impact of Inflation on Real Estate Investment Perfomance And Effective Investment Decisions

Nworah,

Idu,

Ogbuefi

2023

J. of Law and Sust. Develop.

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Purpose: This study aims to examine the impact of inflation on key variables of real estate investment performance and investment decisions. Theoretical Reference: This paper considers several models of real estate investment performance indicators because the effect of inflation on key variables of real estate investment performance is an important factor in investment decisions. Since effective investment decision is key to avert investment loss especially during inflation period, this paper follows the suggestions by Otegbulu (2022) and Georgiv, et al (2002) that property incomes and values are not static during periods of inflation bur responds to economic dynamics, and could infact trigger favourable investment opportunities in real estate. This paper therefore follows these models/suggestions of Otegbulu (2022) and Geoargiv, et al, (2002) to examine several real estate investment to offer appropriate reflection of how inflation impacts of incomes from real estate investment. Method: Data collected were analysed using Pearson Correlation Analysis to determine the relationship between inflation rate and real estate investment performance (measured by annual returns). Regression analysis was also employed on the data to determine the level of contribution or degree of impact of inflation on real estate performance. Also data collected on the exchange rate and real estate performance over the study period were analysed using Pearson Correlation Analysis to determine the relationship between exchange rate and real estate investment performance (measured by annual returns on investment). Regression analysis was also employed on the data to determine the degree of impact of exchange rate on real estate investment performance. Data collected for the analysis and hypotheses testing were secondary data over a period from 2005 – 2022. Result: The study reveals that real estate investment market generates average total annual returns of 21.39% under average inflation rate of 12.5%. The test statistics (Pearson Correlation) results shows that the higher the inflation rate, the lower the performance of the real estate investment. Also, the study reveals that as inflation persists causing exchange rate fluctuations, the test statistics (Pearson Correlation) results shows that higher exchange rate causes lower performance of real estate investment. This could be because more than 90% of the real estate construction materials in the study are imported. Conclusion: It is clear and obvious that inflation impacts highly on real estate and capable of distorting projections in property investment. Rational investors must therefore factor in inflation risk in investment decisions. The study has shown that inflation has significant impact on annual returns of real estate and consequently affects investment performance. The study concluded that the higher the inflation, the lower the performance of the real estate investment and that the continuous rise in inflation rate reduces the purchasing power of the local currency leading to local currency devaluation. Also, it was concluded that higher exchange rate causes lower performance of the real estate in terms of annual returns. Research Implications: One of the major implications of the findings from this study is that as inflation raises the volatility of local currency which adversely affect the cost of construction, real estate investment performance is hindered. The risk element increases which could lead to project cost over-run, abandonment or increased vacancy rate. Investors become skeptical in making investment decisions because of uncertainties. Policy makers should put in place policies and guidelines that will attract cross-border investors who can take advantage of the local currency devaluation to improve their real estate investment portfolios. Originality/Value: The relationship between inflation rate, exchange rate and real estate performance (measured by rate of returns on the investment) is of great concern for real estate practitioners and investors. The study is original well thought efforts of the authors as contribution to real estate practice and education in developing economies currently being threatened by rising inflation. It is believed that this study will be very useful to global investors who will like to invest in the study area in particular and other emerging markets in general.

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Implications of applying fair value accounting to modern financial reporting

Petrović¹,

Radosavac²,

Mashovic³

2023

J Process Man & New Technol

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Fair value accounting is a concept whose main goal is to provide quality information about financial status, success and cash flows in order to satisfy the informational needs of investors. By introducing this concept, the focus is placed on the balance sheet and not on the income sheet statement as was in the case of the historical cost concept. The goal of financial reporting is to show assets, liabilities and net assets in the balance sheet at fair value on the balance sheet date. The subject of research in this work is the application of fair value accounting, which will be shown on a concrete example in which equipment will be evaluated according to the concept of historical cost, and then the equipment will be evaluated according to the concept of fair value. After that, a comparison of these two concepts will be made, in order to present the financial effects of valuation on assets and liabilities. The importance of applying historical cost accounting is the correct periodization of income and expenses, while the importance of fair value accounting is the presentation of assets and liabilities according to current market prices. The elaborated moments resulted in the reconciliation and unification of these two concepts, which is realized by the hybrid model of financial reporting.

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The Impact of Accounting Measurement of Financial Instruments at Fair Value on Stock Prices Changes for Banks: an Empirical Study on Companies Listed on Iraqi Stock Exchange

Cited by 3 publications

References 1 publication

The Impact of Micro Factors on the Performance of the Iraq Stock Exchange Index for the Period 2005-2021

The Impact of Micro Factors on the Performance of the Iraq Stock Exchange Index for the Period 2005-2021

The Impact of Inflation on Real Estate Investment Perfomance And Effective Investment Decisions

Implications of applying fair value accounting to modern financial reporting

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