Title: THE IMPACT OF DEBT RATIO ON ACCRUALS QUALITY: EVIDENCE FROM IRAQI COMPANIES

Authors: Assist. Prof. Dr. Ammar Ghazi Ibrahim Al-Ezzi

Abstract: An examination of the relationship between debt ratio and the accruals of accruals in Iraqi companies. The study aims to furnish actual evidence regarding the impact of debt financing on the quality of accounting information, as assessed by accruals quality. The study employed a quantitative design utilising panel data from four businesses listed on the Iraq Stock Exchange (ISX) for the years 2022 to 2024, yielding 12 firm-year observations. The Modified Jones Model was employed to assess accrual quality, while the Debt Ratio was utilised to delineate the debt ratio. Descriptive statistics, correlation analysis, and fundamental linear regression analysis were conducted utilising Microsoft Excel. The results show a moderate inverse correlation between Debt Ratio and Accruals Quality (r=-0.523). The regression analysis showed a negative coefficient (-0.481) which implies that the higher level of debt financing is associated with lower accruals quality. The association was not statistically significant at the 5% level (p = 0.081). The model explained around 27.3% of the variance in accruals quality (R2=0.273). The study concludes that the debt ratio may have an effect on the accrual quality and the evidence is not sufficient to demonstrate a statistically significant effect among the sampled Iraqi firms. The findings contribute to the literature on financial reporting quality in emerging markets and provide useful information to investors, creditors and regulators.

Keywords: Debt Ratio; Accruals Quality; Financial Leverage; Accounting Information Quality; Financial Reporting Quality; Iraq Stock Exchange (ISX).

PDF Download