The Impact of Firm Strategy on Real Earnings Management Practices

Abstract

The paper aims to measure the impact of the company's strategy on managing real profits. Thus, the research dealt with the practical side of the data available in the financial statements of a sample of Iraqi companies listed in the Iraq Stock Exchange, as the number of companies in the study sample was (10) companies for the period (2011-2020). The Company: (1) research and development expenditures for sales (product development or discovery of a new product); (ii) selling and general and administrative expenses of sales (capturing marketing efforts); (iii) the annual percentage change in sales (the company's growth chart); (4) Personnel to sales (shows production efficiency); (v) Net property, plant and equipment to total assets (representing capital structure); and (6) the standard deviation of the company's total number of employees (showing organizational stability). Where the management of real profits was measured by "manipulating sales, manipulating production, and manipulating optional expenses, and the program ((SPSS25) was used in the analysis and knowledge of the simple linear correlation, the t test, the significance of the linear correlation coefficient, the simple linear regression, the variance and the f test in Analysis of the hypotheses of the study After testing the hypotheses of the research, a number of conclusions were reached, the most important of which are: the existence of a direct relationship between the company's strategy and profit management with real activities, there is no specific pattern of strategy that prevails in Iraqi industrial companies, and that companies change the type of their strategy from time to time in response to competition conditions and requirements Work environment.