The Impact of Corporate Governance on Enhancing the Transparency of Financial Reporting for Measuring Right-of-Use Assets under IFRS 16: An Applied Study on Iraqi Commercial Banks

Abstract

Corporate governance has emerged as a critical determinant of financial reporting quality, particularly in regulatory environments where International Financial Reporting Standards (IFRS) introduce significant managerial discretion. This study investigates the impact of corporate governance mechanisms on the transparency of financial reporting related to the recognition, measurement, and disclosure of right-of-use (ROU) assets under IFRS 16 — Leases in Iraqi commercial banks. A structured questionnaire survey was conducted with a purposive sample of 80 participants comprising board members, chief financial officers, internal and external auditors, and senior accounting personnel from Iraqi commercial banks listed on the Iraq Stock Exchange. The questionnaire comprised 20 items across two dimensions: corporate governance (10 items) and IFRS 16 reporting transparency (10 items), measured on a five-point Likert scale. Internal reliability was assessed via Cronbach’s Alpha; descriptive statistics and regression modelling via SPSS v.21 were employed. The Cronbach’s Alpha coefficient reached 0.890, confirming high internal consistency. Regression analysis revealed R² = 0.823, indicating that corporate governance mechanisms account for 82.3% of the variance in IFRS 16 reporting transparency (F = 362.243, p < 0.001; R = 0.879). Corporate governance mechanisms — particularly board independence, audit committee effectiveness, and commitment to ethical and regulatory standards — exert a strong and statistically significant positive effect on the transparency of financial reporting under IFRS 16 in Iraqi commercial banks.