The Impact of Innovative Accounting Practices on Corporate Governance and Their Reflection on The Credibility of Financial Reports: An Analytical Study
DOI:
https://doi.org/10.47134/jeae.v3i3.1056Keywords:
Innovative Accounting, Corporate Governance, Credibility of Financial Reports, Iraq Stock ExchangeAbstract
The research aims to study the impact of creative accounting practices on corporate governance, specifically (board division based on loans, transparency and disclosure, and capital adequacy), and their effect on the credibility of financial reports at a sample of Iraqi banks listed on the Iraq Stock Exchange for the period (2015-2022). To address this problem and achieve the research objective, the descriptive approach was adopted in analysing the research results, in addition to using the statistical package (SPSS) to analyse the data extracted from the Iraq Stock Exchange. Accordingly, the research produced several findings, the most important of which is the existence of a significant relationship and influence between Innovative Accounting Practices, Corporate Governance, and the Credibility of Financial Reports, which has directly and indirectly contributed to drawing the attention of commercial banks to improve their financial performance. This is because the profits reported by the Iraqi private commercial banks in the research sample do not exhibit a high level of earnings quality due to their reliance on Innovative Accounting Practices in making and giving financial reports, finished deliberate intervention in accounting measurement and disclosure, within or beyond usually putative accounting values, to affect the reported profits. Therefore, the research recommended that the banks in the sample should cease applying Innovative Accounting Practices, as these practices have negative effects on the bank's value and future, necessitating the application of Corporate Governance principles to address these practices and improve the Credibility of Financial Reports.
References
Abbas, D. S., Ismail, T., Taqi, M., & Yazid, H. (2021). The influence of independent commissioners, audit committee and company size on the integrity of financial statements. Studies of Applied Economics, 39(10).
Abdullah, O. O. (2025). The Extent to which Accounting Information is affected by Innovative Accounting Methods. Journal of Economics and Administrative Sciences, 31(145), 175-185.
Abed, I. A., Hussin, N., Ali, M. A., Haddad, H., Shehadeh, M., & Hasan, E. F. (2022). Innovative Accounting determinants and financial reporting quality: systematic literature review. Risks, 10(4), 76.
Abubakr, A. A. M., Khan, F., Alomari, K. M., Sahal, M. S. G., Yousif, N. A. I., & Yousif, H. K. (2025). The role of the internal auditor, stakeholders, and external auditor in discovering and reducing innovative Accounting practices in UAE companies. Security Journal, 38(1), 31.
Adámiková, E., & Čorejová, T. (2021). Innovative Accounting and the possibility of its detection in the evaluation of the company by expert. Journal of Risk and Financial Management, 14(7), 327.
Adel, K &Saadawi. M., (2017). Using the modified Jones model to detect innovative Accounting techniques – a case study of French publicly listed companies. Journal of Economic and Financial Studies, 10(1), 85-101.
Ahmed, A. (2025). The Role of External Auditors in Reducing Innovative Accounting Techniques: A Case Study of the Audit Bureau, Western Region Branch. Surman Journal of Science and Technology, 7(2), 160-174.
Akinsola, K. (2025). Legal Compliance in Corporate Governance Frameworks: Best Practices for Ensuring Transparency, Accountability, and Risk Mitigation. Accountability, and Risk Mitigation (January 31, 2025).
Al Amosh, H., & Khatib, S. F. (2025). Cybersecurity transparency and firm success: insights from the Australian landscape. Australian Economic Papers, 64(2), 189-204.
Al Astal, A. Y. M., Ateeq, A., Milhem, M., & Shafie, D. I. (2024). Corporate Governance and Internal Control Mechanisms: Developing a Strategic Framework. In Business Sustainability with Artificial Intelligence (AI): Challenges and Opportunities: Volume 2 (pp. 551-564). Cham: Springer Nature Switzerland.
Al Astal, A. Y. M., Ateeq, A., Milhem, M., Alzoraiki, M., Ali, S. A., & Ali, R. (2024). Navigating Financial Integrity: The Role of External Audits in Mitigating Innovative Accounting Practices. In Innovative and Intelligent Digital Technologies; Towards an Increased Efficiency: Volume 1 (pp. 423-430). Cham: Springer Nature Switzerland.
Alduais, F., Alsawalhah, J., & Almasria, N. A. (2023). Examining the impact of corporate governance on investors and investee companies: Evidence from Yemen. Economies, 11(1), 13.
Ali Shomo, M. A., Mohamed Almakki, N. A., & Mohammed Ahmed Kratat, R. M. (2023). Impact Of Applying Governance On Reducing Innovative Accounting Practice And Enhancing Published Accounting Information Quality. Journal of Namibian Studies, 34.
Al-Khoury, A., Al-Shattarat, H. U. S. N. I., Alghazzawi, R. A. S. H. A., & Haddad, H. O. S. S. A. M. (2023). Innovative Accounting practices and the credibility of financial reports: an empirical study on the Jordanian commercial banks. Wseas. Trans. Comput. Res, 393-407.
Al-Mustawfi, H. (2024). Innovative Accounting practices and their impact on shareholder wealth in commercial banks. Journal of Management and Economics, 49(143), 25-35.
Al-Naeem, M. (2025). The impact of corporate governance characteristics on the level of disclosure of social responsibility elements: A practical case study on Saudi industrial companies. Arab Journal of Management, 45(6), 69-88.
Al-Shar,T.A. (2025). The role of audit committees in reducing innovative Accounting practices. Journal of Bani Walid University for Human and Applied Sciences, Volume 10, Issue 1.
Alsohagy, M. (2013). Credibility of Financial Reporting Communication Between Investors and Management: An Exploratory Study. Business Review, 2, 61-68.
Al-Tayeb, A., (2025). The role of artificial intelligence technologies in reducing innovative Accounting practices. Scientific Journal of Business and Environmental Studies, 16(2), 27-54.
Anugrah, S., Suyono, W. P., & Puspa, E. S. (2025). The influence of innovative Accounting practices on the risk of tax audits by the directorate general of taxes. International journal of economic literature, 3(6), 925-937.
Augustine, A. A. (2025). Auditing in local governments: Panacea for accountability, transparency, and ethical standards in grassroots governance and service delivery in the 21st century. International Journal of Management and Economics Invention, 11(3), 4124-4135.
Aya, K, & Aida, F. (2024). Corporate Governance and its Role in Evaluating the Financial Performance of Economic Institutions (Doctoral dissertation, University Center of Abdalhafid Boussouf - Mila).
Barkhordari, R. 2017 . Social Presence, Trust in Reviewers and Decision Quality in Online Shopping Environments, Montreal, QC , Queen’s University.
Bligh, M. C. (2017). Leadership and trust. In Leadership today (pp. 21-42). Springer, Cham.
Blue, G., Chahrdahcheriki, M., Rezaee, Z., & Khotanlou, M. (2025). A model for predicting innovative Accounting in emerging economies. International Journal of Accounting & Information Management, 33(1), 1-31.
Bogos, E. (2023). Safeguarding financial integrity: the role of auditors in mitigating the innovative Accounting practices. In Elevating Europe-Smart Initiatives and Administrative Innovation. Proceedings of the International Conference EU-PAIR 2023 (pp. 33-39). Editura Universităţii» Alexandru Ioan Cuza «din Iaşi.
Debbarma, J., & Roy, C. (2023). Effects of corporate governance on innovative Accounting practices: Evidence from NSE-listed companies in India. Indian Journal of Corporate Governance, 16(1), 52-78.
Efunniyi, C. P., Abhulimen, A. O., Obiki-Osafiele, A. N., Osundare, O. S., Agu, E. E., & Adeniran, I. A. (2024). Strengthening corporate governance and financial compliance: Enhancing accountability and transparency. Finance & Accounting Research Journal, 6(8), 1597-1616.
Ezz, E. Din & Hussein, A., 2019, Corporate Governance Mechanisms and Their Role in Achieving the Effectiveness of Accounting Conservatism, Journal of Administrative Sciences, Issue 3.
Farooq, M., Khan, I., Kainat, M., & Mumtaz, A. (2025). Corporate social responsibility and firm value: the role of enterprise risk management and corporate governance. Corporate Governance: The International Journal of Business in Society, 25(3), 631-663.
Gardi, B., Aga, M., & Abdullah, N. N. (2023). Corporate governance and financial reporting quality: The Mediation Role of IFRS. Sustainability, 15(13), 9869.
Hijazi, D. H., Alzubi, E. A., Omran, M. E. M., & Al Gohery, T. (2025). Corporate Governance and Its Role in Economic Development. Journal of Business and Environmental Sciences, 4(2), 192-209.
Hsiao, H. Y., Liu, W. P., & Wu, S. J. (2025). Does increased monitoring enhance the credibility of financial reports? Evidence of auditing semi‐annual financial statements. Accounting & Finance, 65(1), 753-772.
Humpherys, S. L., Moffitt, K. C., Burns, M. B., Burgoon, J. K., & Felix, W. F. (2011). Identification of fraudulent financial statements using linguistic credibility analysis. Decision support systems, 50(3), 585-594.
Ikeokwu, Q., Micha, L. C., & Umobong, A. A. (2024). Innovative Accounting And Firm Value Of Listed Manufacturing Companies In Nigeria. Int. J. Social Science Humanities Research, 7(06), 21-40.
Indoria, D., & Devi, K. (2025). Exploring The Impact of Innovative Accounting on Financial Reporting and Corporate Responsibility: A Comprehensive Analysis in Earnings Manipulation in Corporate Accounts. Journal of Marketing & Social Research, 2, 668-677.
Isoso, M. (2024). Innovative Accounting practices and shareholders wealth: Evidence from deposit money banks in Nigeria. Journal of Accounting and Financial Management.
Jasim, T. A., & Ibrahim, M. A. (2023). The impact of adopting International Financial Reporting Standards on the quality of financial reports using the accrual model. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(6), 14.
Jumaah, N. & Kareem, A.(2025) "The Role of Profitability and Liquidity in Capital Adequacy: An Applied Study in a Sample of Iraqi Private Commercial Banks." Journal of Accounting and Financial Studies (JAFS) 20.72, 428-440.
Kallantary, M., Valiyan, H., Abdoli, M., & Shahri, M. (2025). Ontological basis of the innovative Accounting phenomenon as a financial misstatement. Journal of Accounting Literature, 47(3), 650-676.
Kamau, C. G., & Murori, C. K. (2024). Characteristics of innovative Accounting: A Multifaceted Literature Analysis. World Journal of Advanced Research and Reviews, 23(1), 2035-2043.
Liang, Y., Marinovic, I., & Varas, F. (2018). The credibility of financial reporting: A reputation-based approach. The Accounting Review, 93(1), 317-333.
Luca, F. A., Tiganas, C. G., Grigoras-Ichim, C. E., Filipeanu, D., & Morosan-Danila, L. (2024). Critical perspectives of organisational behaviour towards stakeholders through the application of corporate governance principles. Administrative Sciences, 14(5), 84.
Manginte, S. Y. (2024). Fortifying transparency: Enhancing corporate governance through robust internal control mechanisms. Advances in Management & Financial Reporting, 2(2), 72-84.
Marinovic, I., Liang, Y., & Varas, F. (2017). The credibility of financial reporting: A reputation-based approach. Rock Center for Corporate Governance at Stanford University Working Paper, (224), 17-10.
Mesioye, O., & Bakare, I. A. (2024). Evaluating financial reporting quality: Metrics, challenges, and impact on decision-making. Int J Res Public Rev, 5(10), 1144-1156.
Milhem, M., Ateeq, A., Al-saffar, N., Ateeq, R. A., Barkat, B., & Del Rosario Bunagan, V. (2025). The Role of Job Stability in Reducing Employee Turnover Rates in Nass Bahrain Company. In Sustainable Data Management: Navigating Big Data, Communication Technology, and Business Digital Leadership. Volume 2 (pp. 665-679). Cham: Springer Nature Switzerland.
Muqadi.A &Al-Afaas.H., (2025). The relationship between innovative Accounting practices in the income statement and tax evasion: and the moderating role of tax auditing. Journal of Educational Sciences and Humanities, (49), 942-963.
Musalli.A, Al-Shahoubi.I &Daqiq.F., (2025). The role of external auditing as a corporate governance mechanism in reducing the effects of innovative Accounting on the reliability of financial statements. Journal of Economic and Business Studies, 12(2), 6-32.
Olaoye, A. A., & Agbaje, A. G. A. (2024). Restoring Public Confidence in Financial Reporting Landscape: A Comprehensive Analysis of Accounting Ethics and Governance Integrity in Nigeria. Journal of Management and Social Sciences, 13(2).
Oyewo, B., Tawiah, V., & Hussain, S. T. (2023). Drivers of environmental and social sustainability accounting practices in Nigeria: a corporate governance perspective. Corporate Governance: The International Journal of Business in Society, 23(2), 397-421.
Puaschunder, J., & Gelter, M. (2025). Accounting for the arts: a value theory of arts and comparative analysis. Journal of Applied Accounting Research, 1-14.
Pucheta-Martínez, M. C., & Gallego-Álvarez, I. (2019). An international approach of the relationship between board attributes and the disclosure of corporate social responsibility issues. CorporateSocial Responsibility and Environmental Management, 26 (3), 612-627.
Rahman, M. S., Hasan, M. J., Khan, M. S. H., & Jahan, I. (2023). Antecedents and effect of innovative Accounting practices on organizational outcomes: Evidence from Bangladesh. Heliyon, 9(2).
Rashid, A., Akmal, M., & Shah, S. M. A. R. (2024). Corporate governance and risk management in Islamic and convectional financial institutions: explaining the role of institutional quality. Journal of Islamic Accounting and Business Research, 15(3), 466-498.
Remenarić, B., Kenfelja, I., & Mijoč, I. (2018). Innovative Accounting–motives, techniques and possibilities of prevention. Ekonomski vjesnik: Review of Contemporary Entrepreneurship, Business, and Economic Issues, 31(1), 193-199.
Richard, G., & Odendaal, E. (2021). Credibility-enhancing mechanisms, other than external assurance, in integrated reporting. Journal of Management and Governance, 25(1), 61-93.
Saada, S. (2025). The Influence of Financial Innovation and Market Capitalization on Economic Growth: A Comparative Review of Global and Emerging Markets. Journal of Recycling Economy & Sustainability Policy, 4(1), 17-29.
SACKEY, J. (2024). Effect of internal auditing on the financial reporting credibility in university of cross river state (unicross) nigeria: a study of two selected campuses. Certified national accountant journal Учредители: Association of National Accountants of Nigeria, 31(4), 1-14.
Said.B & Djelloul.H ., (2021). The role of corporate governance in determining the level of accounting conservatism in the financial statements of Algerian companies: A field study. Journal of Economic Growth and Entrepreneurship, 4(7), 37-50.
Saleh, M. M. A., Jawabreh, O., & Abu-Eker, E. F. M. (2023). Factors of applying innovative Accounting and its impact on the quality of financial statements in Jordanian hotels, sustainable practices. Journal of Sustainable Finance & Investment, 13(1), 499-515.
Salehi, M., Ammar Ajel, R., & Zimon, G. (2023). The relationship between corporate governance and financial reporting transparency. Journal of Financial Reporting and Accounting, 21(5), 1049-1072.
Schröder, P. (2022). Mandatory non-financial reporting in the banking industry: assessing reporting quality and determinants. Cogent Business & Management, 9(1), 2073628.
Shroff, N. (2015). Real effects of financial reporting quality and credibility: Evidence from the PCAOB regulatory regime. Available at SSRN.
Smoljic, M., & Konjic, Z. (2024). Foreign financial investments (FDI) and criminal law protection of investors. Economic and Social Development: Book of Proceedings, 652-661.
Soejoeti, M. I., Khairunnisa, A., & Andreansyah, Y. (2024). Analyzing Potential Role of Advancing SDGs 16 Through Religious Moderation: Creating Social Harmony and Upholding Human Rights in the Contemporary World. KnE Social Sciences.
Sulaiman, H &Hasaballah, A. (2024). Corporate governance and its relationship to dividend distribution practices in companies listed on the stock exchange. Journal of Administrative Research, 42(3).
Xanthopoulou, A., Skordoulis, M., Kalantonis, P., & Arsenos, P. (2024). Integrating corporate governance and forensic accounting: A sustainable corporate strategy against fraud. Journal of Governance and Regulation/Volume, 13(2).
Zaid, M. A., Wang, M., & Abuhijleh, S. T. (2019). The effect of corporate governance practices on corporate social responsibility disclosure: Evidence from Palestine. Journal of Global Responsibility, 10(2), 134-160.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Faraj Gheni Abbood, Baydaa Fadhil Jasim
This work is licensed under a Creative Commons Attribution 4.0 International License.
