The current study aims to examine the impact of adopting International Financial Reporting Standards (IFRSs) on the relationship between financial flexibility and investment opportunities, with a focus on banks listed on the Iraq Stock Exchange. To achieve the study objectives, a quantitative empirical approach was adopted, based on evaluation and mathematical analysis. Annual financial statements of the listed banks, as well as official market bulletins, were used as primary data sources for the period 2006-2023. The study sample consisted of 17 banks. The sample selection criteria included continuous trading of the bank’s shares throughout the study period without any interruptions exceeding six months, the absence of mergers or stock splits during the period, and full alignment of the sample with the study’s research objectives.
The findings indicate a significant positive effect of financial flexibility on investment opportunities. In contrast, the adoption of IFRSs has a significant negative impact on investment opportunities. Nevertheless, the results indicate a positive, significant moderating effect of adopting IFRSs on the relationship between financial flexibility and investment opportunities. Based on these results, the study recommends enhancing the level of compliance with IFRSs among banks listed on the Iraq Stock Exchange, by focusing on the comprehensive and practical implementation of the standards. Such compliance is expected to improve the quality of financial information, thereby assisting bank management in optimizing capital structure decisions, evaluating investment alternatives, and identifying investment opportunities with positive net present value, in alignment with the banks’ capabilities and financial flexibility.
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