Evaluating Common Stock Prices Through the Residual Income Model and Forecasting Them for the Year 2023: an Analytical Study on a Sample of Commercial Banks Listed in the Iraq Stock Exchange

Objectives: The study aims to assess the organizational performance of the Iraqi banking industry using the residual income model. It seeks to analyze the impact of accounting values (book value, earnings per share, and dividends) on ordinary share prices and predict future stock prices. Methods: The residual income model, which integrates accounting values through the clean surplus relation, was applied to the Iraqi commercial banking sector listed on the Iraq Stock Exchange. A sample of 10 banks was selected for analysis, covering the period from 2013 to 2023. The model was further used to forecast stock prices until 2030. Results: The findings indicate that all sampled commercial banks suffer from declining regulatory performance, as evidenced by negative residual income values. This decline is attributed to the low current market values of these banks, which serve as a negative warning indicator for investors and shareholders. The market values of shares were found to be lower than their book values. Conclusion: The study concludes that the Iraqi commercial banking sector faces significant challenges in maintaining positive regulatory performance. The negative residual income and lower market values compared to book values signal potential risks for investors, highlighting concerns about the financial stability and valuation of these banks in the market.