The impact of governance on strengthening audit practices and promoting financial transparency: an empirical investigation in the Iraqi business context

This study examines the relationship between corporate governance mechanisms and financial disclosure among companies listed on the Iraq Stock Exchange. Drawing on agency theory and stakeholder theory, the study considers how internal and external governance arrangements influence transparency in an emerging market characterized by institutional and regulatory constraints. The study employs a quantitative research design based on firm-year data from 19 listed companies over the period 2018–2022, yielding 95 observations. Financial disclosure is measured using a structured disclosure index derived from annual reports. The governance variables include board structure, managerial ownership, ownership concentration, audit committee presence, remuneration committee presence, risk committee presence, and the external auditor’s opinion. The findings indicate that governance mechanisms linked to active monitoring, particularly audit and risk committees, are positively associated with financial disclosure. Remuneration committees and unqualified audit opinions also show positive relationships with disclosure, while ownership concentration is negatively associated with transparency. Board structure does not show a statistically significant effect, suggesting that formal board arrangements alone may not be sufficient to enhance disclosure in this context. The study contributes to the governance and disclosure literature by providing empirical evidence from the Iraqi business environment, where institutional constraints may shape the practical effectiveness of governance mechanisms. The results offer implications for regulators, policymakers, and boards seeking to strengthen financial reporting practices and improve investor confidence in emerging markets.