The impact of Managerial Ability on the Accounting Earning Quality: An applied study in the Iraqi environment

Abstract

The research aims to test the effect of Managerial Ability on the Earning Quality in the Iraqi banking and industrial sector. In the research, a review and identification of the importance of managerial ability, accounting and professionally, and explaining the role of a managerial ability in promoting accounting practices, were reviewed. The method of Data Envelopment Analysis (DEA) was adopted to measure managerial ability, which is in two stages which was adopted by (Demerjian et al., 2012). The concept of the earning quality, their characteristics and determinants were dealt with, and the model (Francis, 2004) was adopted as a basis for its. Which classified it into accounting-based measures (according to the accruals quality) and market-based measures (according to the measure of market to book - MTB). The data was collected by adopting the financial reports of the Iraq Stock Exchange for a sample that included a total of banks and industrial companies during the period from (2012-2020). The research concluded that there is a significant correlation between managerial ability and the earning quality according to the accruals, but it is not significant according to the (MTB) model. It was also found that there is a positive and significant effect of the managerial ability on the earning quality according to the accruals in the research sample. This indicates that whenever the efficiency of managerial ability improves in the research sample companies, this is reflected in enhancing the levels of the earning quality according to the accruals scale.