The impact of financing behavior in economic value added: An analytical study of a sample of industrial companies listed on the Iraq Stock Exchange

Abstract

The study aims to achieve several objectives, the most important of which is to analyze the nature of the financing behavior adopted by business companies, by measuring the impact of financing behavior—represented by short-term debt, common stock, and retained earnings—on Economic Value Added (EVA) using the EVA model for a selected sample of business companies listed on the Iraq Stock Exchange during the period from 2005 to 2024. The study relied on the descriptive-analytical approach to present the theoretical and analytical aspects of the research variables, and the quantitative approach to test the research hypotheses in order to address the research problem, which revolves around the question: To what extent does financing behavior affect the Economic Value Added of industrial companies listed on the Iraq Stock Exchange? The study assumes a main hypothesis positing the existence of a statistically significant impact of financing behavior on the economic value of industrial companies. To test the research hypotheses, time series data and multiple linear regression analysis were employed. The results revealed a statistically significant negative impact of common stock financing on Economic Value Added, a statistically significant positive impact of retained earnings financing on Economic Value Added, and no significant impact of short-term financing on Economic Value Added.

The study concludes with a set of recommendations for financial decision-makers in the business companies of the study sample to help enhance their economic value, including: adopting an effective financing policy that ensures the optimal use of shares as a financing tool, achieving a balance between equity financing and debt financing.