Impact of Accounting Information Comparability on Accounting Conservatism and Investor Sentiment: Evidence from Iraq

The study investigates the impact of information comparability and accounting conservatism on investor sentiment in listed companies on the Iraq Stock Exchange (ISE). A quantitative approach was used to measure conditional conservatism using earnings skewness, and unconditional conservatism was used using the accruals index to measure the comparability of accounting information. The turnover ratio and the share price to its share of earnings were also used to measure investors’ tendencies using a sample of 120 observations in Iraqi commercial banks listed on the Iraq Stock Exchange for 2022–2013. The results show no statistically significant effect of conservatism on investors’ tendencies, and there is no statistically significant effect of the comparability of accounting information on the relationship between accounting conservatism and investors’ tendencies. The paper fills the research gap due to the need for empirical studies examining the impact of information comparability and accounting conservatism on investor sentiment in a developing market such as Iraq. This study fills this gap by providing evidence on how accounting conservatism affects investor sentiment in companies listed on the Iraq Stock Exchange. This study presents crucial data for investors, financial report preparers, and company management in Iraq. It demonstrates that eliminating accounting conservatism from the conceptual framework might amplify the adverse effects of investor sentiment on the Iraqi capital market. The research proposes that Iraqi business managers have the potential to improve capital market efficiency by expediting the release of damaging information, strategically acknowledging losses, and preventing investors from making impulsive actions that might diminish their value.