THE EFFECT OF AUDIT EFFECTIVENESS USING DATA ENVELOPMENT ANALYSIS ON ENHANCING THE VALUE OF BANKS LISTED ON THE IRAQ STOCK EXCHANGE

Abstract

This study aimed to demonstrate the effect of audit effectiveness, as measured by Data Envelopment Analysis (DEA), on enhancing the value of banks listed on the Iraq Stock Exchange, by examining the effect of audit effectiveness — measured through both scale efficiency indicators and technical efficiency indicators — on the value of these banks. The study adopted the descriptive-analytical approach, applied to Iraqi audit offices and firms responsible for auditing the accounts of banks listed on the Iraq Stock Exchange. The study population consisted of audit firms licensed under the system governing the practice of the auditing and oversight profession in Iraq, and the sample comprised three audit firms auditing the accounts of twenty private banks listed on the Exchange. The independent variable (external audit effectiveness) is measured by using Data Envelopment Analysis by the DEAP 1.2 program, two approaches were used, technical efficiency and scale efficiency, while the dependent variable (bank value) is measured by using the market value approach, based on trading reports published on the official website of the Iraq Stock Exchange. The hypotheses were tested using simple and multiple linear regression using the SPSS statistical program. The study found a statistically significant positive effect of the effectiveness of the audit measurement by indicators of scale efficiency on improving the value of banks listed on the Iraq Stock Exchange, while no statistically significant effect was found for technical efficiency indicators. The study recommends strengthening the independence of external auditors, training them in modern methodologies, and expanding the scope of research to include other dimensions of bank value, such as financial risk and operational efficiency.