The Role of Corporate Governance in Enhancing Financial Reporting Transparency in Iraqi Commercial Banks

Abstract

This study aims to examine the role of corporate governance in enhancing the transparency of financial reporting in Iraqi commercial banks, in light of the growing importance of the banking sector in supporting financial stability and economic growth. The significance of this topic stems from the fact that transparency in financial reporting represents a fundamental factor in strengthening the confidence of depositors, investors, and regulatory authorities, as well as improving the quality of economic decision-making and reducing unsound financial practices. The study adopts a descriptive–analytical approach, combining a theoretical framework that addresses the concept of corporate governance, its principles and mechanisms, and the concept of financial reporting transparency and disclosure standards, with an applied framework based on field data. Primary data were collected through a questionnaire distributed to a sample of employees in selected Iraqi commercial banks listed on the Iraq Stock Exchange. The data were analyzed using SPSS statistical software, employing both descriptive and inferential statistical methods, including correlation analysis and linear regression, to test the research hypotheses. The findings of the study reveal the existence of a positive and statistically significant relationship between the application of corporate governance mechanisms and the transparency of financial reporting. This indicates that effective implementation of corporate governance contributes directly to improving the level of financial disclosure. The results also show that governance mechanisms such as the board of directors, audit committees, and disclosure practices have the strongest impact on enhancing financial reporting transparency, while internal control systems exhibit a moderate effect, highlighting the need to further develop and strengthen these systems. The study concludes that corporate governance represents an effective tool for improving the quality of financial reporting and enhancing confidence in the Iraqi banking sector. Accordingly, it recommends strengthening the independence of boards of directors, activating the role of audit committees, developing internal control systems, and ensuring strict compliance with disclosure and transparency standards in order to promote financial stability and support sustainable economic development.