Identifying the Most Influential Accounting Indicators on the Market Value of Iraqi Commercial Banks: An Empirical Study Using Panel Data Models

Abstract

This study aims to identify the most influential accounting indicators on the market value of Iraqi commercial banks, using Panel Data methodology during the period (2005-2024). The study relied on a sample of (6) Iraqi commercial banks listed on the Iraq Stock Exchange. Data were analyzed using three regression models: Pooled OLS, Fixed Effects Model (FEM), and Random Effects Model (REM), with appropriate diagnostic tests (Hausman, Wooldridge, Breusch-Pagan, Pesaran CD).

The results showed that the Fixed Effects Model (FEM) is the most appropriate for data analysis, and that Return on Equity (ROE) is the most influential accounting indicator on market value, being positive and significant at the 1% significance level. The results also showed a negative and significant impact for both the Capital Adequacy Ratio (CAR) and the Loan-to-Deposit Ratio (LDR), which was interpreted in light of the "Overcapitalization" phenomenon and liquidity risks associated with excessive reliance on non-deposit financing. In contrast, neither the Liquidity Ratio nor the Loan Loss Provision Ratio (LLP_Ratio) showed any significant impact.