Administrative Fraud and its Impact on Accounting Measurement and its Reflection on the Value of the Bank: Evidence from the Iraqi Market
Keywords:
Management Fraud, Accounting Measurement, Bank Value
Abstract
This study seeks to examine the effects of administrative fraud on accounting measurement, its implications for the value of the sampled banks, and the potential for legalising such fraudulent practices in the accounting measurement process. The study aims to identify suitable solutions to address this issue and analyses the relationship between management fraud in accounting measurement and its impact on the observed decline. Technology plays a crucial role in various aspects of our lives in the modern world. It has the monetary worth of the banks included in the research sample. The worth of the banks and associated dangers were predicted using Tobin's Q model. An applied technique was employed for four banks listed on the Iraq Stock Exchange to accomplish the research objectives and examine the hypotheses. The study period from 2012 to 2021, during which the hypotheses were subjected to statistical testing. The study revealed a limited oversight of bank management in the sampled research, resulting in a lack of effective regulation and minimal coordination between owners and executive managers. This restricted the management's capacity to make critical decisions, particularly in cases where significant shareholders intervened. Consequently, this hindered the bank's ability to optimise resource allocation and impeded future expansion plans, ultimately leading to declining growth opportunities. The potential hazards linked to the decrease in value. The research sample reveals that all banks examined were affected by administrative fraud, as shown by their financial indicators. Specifically, it was observed that before 2014, all banks in the sample consistently valued their assets at their peak market values.
References
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Qawadri, A. (2018). The impact of alternatives to accounting measurement on the media content of accounting information in light of Algeria’s adoption of international accounting standards. Doctoral thesis, Ferhat Abbas University - Faculty of Economics, Management Sciences and Commercial Sciences, Algeria.
Reschiwati, R., Syahdina, A., & Handayani, S. (2020). Effect of liquidity, profitability, and size of companies on firm value. Utopia y Praxis Latinoamericana, 25(6), 325-332. https://doi.org/10.5281/zenodo.3987632
Rijal, A. (2019). Test of Random Walk Occurrences of Microfinance Sub Index in NEPSE. The Journal of Economic Concerns, 10(1).
Saleh, O. M. (2012). The role of accounting thought in addressing problems of measurement and disclosure of the cost of intellectual capital. PhD thesis, Al-Nilein University, College of Graduate Studies, Sudan.
Sandhu, B. (2013). Financial Fraud. Marshall Cavendish Editions, Singapore. https://www.google.iq/books/edition/Financial_Fraud/xSWJAAAAQBAJ?hl=ar&gbpv=1&pg=PA4&printsec=frontcover.
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Sucuahi, W., & Cambarihan, J. M. (2016). Influence of profitability to the firm value of diversified companies in the Philippines. Accounting and Finance Research, 5(2), 149-153. http://dx.doi.org/10.5430/afr.v5n2p149.
Tabe, R., Lapian, S. L. V. J., Murni, S., & Maramis, J. B. (2022). The effect of firm size, investment opportunity set, and capital structure on firm value. The Seybold Report, 17(105). https://doi.org/10.5281/zenodo.6592088.
Tampubolon, M. F., Erlina, & Fachrudin, K. A. (2021). Analysis of Factors Affecting Firm Value with Intellectual Capital as Moderating Variable in Kompas 100 Companies Listed on the IDX. International Journal of Research and Review, 8(8). https://doi.org/10.52403/ijrr.20210886
Umar, U. H., & Kurawa, J. M. (2019). Business succession from an Islamic accounting perspective. ISRA International Journal of Islamic Finance, 11(2), 267-281.
Wijaya, H., Andy, Febriyanti, L., Cahyadi, H., & Nugraha, A. (2021). Factors Affecting Firm Value in Indonesia’s Manufacturing Firms. Advances in Social Science, Education and Humanities Research, 655.
Zahra, S. A., Priem, R. L., & Rasheed, A. A. (2007). Understanding the causes and effects of top management fraud. Organizational Dynamics, 36(2), 122-139. http://dx.doi.org/10.1016/j.orgdyn.2007.03.002.
Abdel Majeed, Mawazine, Amin, & Berberi Mohamed. (2018). Accounting Measurement According to the Financial Accounting System in Light of Economic Inflation, Hasiba Ben Bouali University in Chlef – Algeria. Academy Journal for Social and Human Studies, 10(1), 57-67. https://www.asjp.cerist.dz/en/article/73955.
Abu Salem, & Sayed Salem Muhammad. (2018). The impact of administrative fortification mechanisms on the company’s value: agency theory versus supervision theory - an experimental study on Egyptian joint-stock companies. Accounting Thought Journal (ATASU), 22(3), 411-468. https://ebook.univeyes.com/185949.
Al-Gburi, D. H. J. A., & Ali Wahhab, A. M. (2023). Applying the Financial Sustainability Standard and its Impact on the Bank’s Value: Evidence from the Iraqi Market. Technium Sustainability, 4, 31–44. https://doi.org/10.47577/sustainability.v4i.9631.
Al-Ghanimi, J. F. N. (2017). Measurement and accounting disclosure of intellectual capital and their impact on the value of the economic unit. Master’s thesis in Accounting, College of Administration and Economics, Al-Qadisiyah University, Iraq. https://accountancy4all.blogspot.com
Ali, M. Rostam, Mahmud, Md. Shahid, & Reshma Pervin Lima. (2016). Analyzing Tobin’s Q Ratio of Banking Industry of Bangladesh: A Comprehensive Guideline for Investors. Asian Business Review, 6(2). https://doi.org/10.18034/abr.v6i2.31.
Al-Ubaidy, S. B. (2020). The effect of earnings management on the market value of stocks under application of International Financial Reporting Standards Applied Study in listed companies Iraq Stock Exchange. Wamead Al-Fikr for research’s journal, 7. https://wameedalfikr.com/?p=1432
Arens, A. A., Elder, R. J., Beasley, M. S., Hogan, C. E., & Jones, J. C. (2019). Auditing: The Art and Science of Assurance Engagements (14th Canadian ed.). Pearson Canada Inc., North York, Ontario.
Arens, A. A., Elder, R., & Beasley, J. M. S. (2012). Auditing and assurance services. Pearson Education, Inc., New Jersey.
Brigham, E. F., & Joel, F. H. (2010). Fundamental of Financial Management (10th ed.). Thomson, Southwestern.
Dang, H. N., Nguyen, T. T. C., & Tran, D. M. (2020). The impact of earnings quality on firm value: The case of Vietnam. Journal of Asian Finance, Economics and Business, 7(3), 63-72. http://dx.doi.org/10.13106/jafeb.2020.vol7.no3.63
Fanning, K. M., & Cogger, K. O. (1998). Neural network detection of management fraud using published financial data. Intelligent Systems in Accounting, Finance & Management, 7(1), 21-41.
Gharaibeh, A. M. O., & Qader, A. A. A. A. (2017). Factors influencing firm value as measured by the Tobin’s Q: Empirical evidence from the Saudi Stock Exchange (TADAWUL). International Journal of Applied Business and Economic Research, 15(6), 333-358.
Hellmann, A., Patel, C., & Tsunogaya, N. (2021). Foreign-language effect and professionals’ judgments on fair value measurement: Evidence from Germany and the United Kingdom. Journal of Behavioral and Experimental Finance, 30, 100478. https://doi.org/10.1016/j.jbef.2021.100478
Ifada, L. M., Faisal, F., Ghozali, I., & Udin, U. (2019). Company attributes and firm value. Evidence from companies listed on Jakarta Islamic index. Revista Espacios, 40(37).
Jihadi, M., Vilantika, E., Hashemi, S. M., Arifin, Z., Bachtiar, Y., & Sholichah, F. (2021). The effect of liquidity, leverage, and profitability on firm value: Empirical evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 8(3), 423-431. https://doi.org/10.13106/jafeb.2021.vol8.no3.0423.
Khairani, P. N. (2018). The effect of funding and investment decisions toward company value with dividend policy as the intervening variable on manufacturing sector listed in Indonesia stock Exchange. RJOAS, 79(7), 54-62. https://doi.org/10.18551/rjoas.2018-07.06
Khalaf, W. S., Jarullah, O. F., Atiyah, S. H., & Atiyah, S. H. (2022). Measurement and accounting disclosure of social responsibility costs. World Bulletin of Management and Law, 7, 71-79.
Khaled, B. (2016). Accounting Measurement of Financial Statement Elements According to the Financial Accounting System). Master’s Thesis, Ibn Khaldun University - Tiaret - Faculty of Economic, Commercial and Management Sciences – Algeria.
Louwers, Y. J, Blay, A. D., Sinason, D. H., & Strawser, J. R. (2018). Auditing & Assurance Services. McGraw-Hill Education, New York.
Luinstra, H. (2019). Espoused corporate values on corporate performance. Master thesis, University of Twente. https://essay.utwente.nl/78004/1/Luinstra_MA_BMS.pdf
Monoarfa, R. (2018). The Role of Profitability in Mediating the Effect of Dividend Policy and Company Size on Company Value. Business and Management Studies, 4(2), 35-44. https://doi.org/10.11114/bms.v4i2.3274.
Musvoto, S. W. (2011). Implications of the crisis of objectivity in accounting measurement on the development of finance theory. International Business & Economics Research Journal (IBER), 10(2). http://dx.doi.org/10.19030/iber.v10i2.1799
Nelles, D. G., & Hazrati, L. N. (2022). Ependymal cells and neurodegenerative disease: outcomes of compromised ependymal barrier function. Brain Communications, 4(6), fcac288. https://doi.org/10.1093/braincomms/fcac288.
Osama, M. D. (2019). The Effects of Multiple Accounting Measurement Alternatives on the Disclosure and Evaluation Process in Economic Institutions - A Case Study of Some Algerian Economic Institutions. PhD thesis, Farhat Abbas University - Faculty of Economics, Management Sciences and Commercial Sciences, Algeria.
Qawadri, A. (2018). The impact of alternatives to accounting measurement on the media content of accounting information in light of Algeria’s adoption of international accounting standards. Doctoral thesis, Ferhat Abbas University - Faculty of Economics, Management Sciences and Commercial Sciences, Algeria.
Reschiwati, R., Syahdina, A., & Handayani, S. (2020). Effect of liquidity, profitability, and size of companies on firm value. Utopia y Praxis Latinoamericana, 25(6), 325-332. https://doi.org/10.5281/zenodo.3987632
Rijal, A. (2019). Test of Random Walk Occurrences of Microfinance Sub Index in NEPSE. The Journal of Economic Concerns, 10(1).
Saleh, O. M. (2012). The role of accounting thought in addressing problems of measurement and disclosure of the cost of intellectual capital. PhD thesis, Al-Nilein University, College of Graduate Studies, Sudan.
Sandhu, B. (2013). Financial Fraud. Marshall Cavendish Editions, Singapore. https://www.google.iq/books/edition/Financial_Fraud/xSWJAAAAQBAJ?hl=ar&gbpv=1&pg=PA4&printsec=frontcover.
Schroeder, A., Mueller, O., Stocker, S. et al. (2006). The RIN: an RNA integrity number for assigning integrity values to RNA measurements. BMC Molecular Biol., 7(3). https://doi.org/10.1186/1471-2199-7-3
Sucuahi, W., & Cambarihan, J. M. (2016). Influence of profitability to the firm value of diversified companies in the Philippines. Accounting and Finance Research, 5(2), 149-153. http://dx.doi.org/10.5430/afr.v5n2p149.
Tabe, R., Lapian, S. L. V. J., Murni, S., & Maramis, J. B. (2022). The effect of firm size, investment opportunity set, and capital structure on firm value. The Seybold Report, 17(105). https://doi.org/10.5281/zenodo.6592088.
Tampubolon, M. F., Erlina, & Fachrudin, K. A. (2021). Analysis of Factors Affecting Firm Value with Intellectual Capital as Moderating Variable in Kompas 100 Companies Listed on the IDX. International Journal of Research and Review, 8(8). https://doi.org/10.52403/ijrr.20210886
Umar, U. H., & Kurawa, J. M. (2019). Business succession from an Islamic accounting perspective. ISRA International Journal of Islamic Finance, 11(2), 267-281.
Wijaya, H., Andy, Febriyanti, L., Cahyadi, H., & Nugraha, A. (2021). Factors Affecting Firm Value in Indonesia’s Manufacturing Firms. Advances in Social Science, Education and Humanities Research, 655.
Zahra, S. A., Priem, R. L., & Rasheed, A. A. (2007). Understanding the causes and effects of top management fraud. Organizational Dynamics, 36(2), 122-139. http://dx.doi.org/10.1016/j.orgdyn.2007.03.002.
Published
2023-11-15
How to Cite
Al-Tameemi, L. A. H., & Wahhab, A. M. A. (2023). Administrative Fraud and its Impact on Accounting Measurement and its Reflection on the Value of the Bank: Evidence from the Iraqi Market. European Journal of Science, Innovation and Technology, 3(5), 164-177. Retrieved from https://ejsit-journal.com/index.php/ejsit/article/view/296
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Copyright (c) 2023 Layth Ali Hammadi Al-Tameemi, Asaad Mohammed Ali Wahhab
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