Analysis of the Relationship Between Financial Reporting Complexity and Earnings Management Practices - A Field Study in A Sample of Private Commercial Banks Operating in Dohuk Governorate

Abstract

This study aims to analyze the relationship between the complexity of financial reports and earnings management practices. To achieve the objective of this study, two main hypotheses were formulated to test the relationship between study variables. The study adopted a descriptive-analytical approach using field methodology to collect data. Simple regression analysis and path analysis were conducted, utilizing SPSS20 software for the data obtained from a sample of 41 accountants working in private commercial banks in Dohuk Governorate. The findings of study revealed a significant positive correlation between the complexity of financial reports and earnings management practices. Additionally, the results demonstrated a statistically significant impact of financial report complexity on earnings management. The study also provided several recommendations, including urging regulatory bodies to issue comment letters to companies that present complex financial statements, emphasizing the need for addressing this complexity and ensuring full disclosure to enhance understanding by relevant stakeholders. Furthermore, the study suggested that banks expand the scope of disclosing essential and relevant information to investors as a means to mitigate earnings management practices.

Keywords

• Financial statements, financial reporting complexity, earnings management.