The impact of implementing IFRS 18 on analyzing financial performance and enhancing investment decisions

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Abstract

This study examines the anticipated impact of implementing the International Financial Reporting Standard 18 (IFRS 18) on improving investors’ ability to analyze the financial performance of banking companies listed on the Iraq Stock Exchange (ISX). The research addresses challenges related to transparency and accounting disclosure, which currently limit investors’ capacity to make informed decisions. An analytical and comparative approach was employed by redesigning the income statements of two banks — Bank of Baghdad and Mansour Bank — to comply with IFRS 18 requirements. These statements were then compared with financial reports prepared under the International Accounting Standard 1 (IAS 1) for the years 2022 and 2023. Key financial ratios relevant to investors were examined to identify observable differences in financial indicators between the two reporting frameworks. The findings indicate that presenting income statements in accordance with IFRS 18 enhances the clarity, transparency, and comparability of financial information. The analysis suggests that such improvements may provide investors with better insights into the financial performance of banks and could influence their decision-making processes. These results are consistent with the studies of Lee (2024) and Czajor (2024).

Keywords: IFRS 18, Financial Performance Analysis, Transparency, Investor Decision-Making

Authors’ individual contribution: Conceptualization — H.Z.A.Z. and R.A.F.A.-R.; Methodology — H.Z.A.Z. and R.A.F.A.-R.; Software — H.Z.A.Z.; Validation — H.Z.A.Z. and R.A.F.A.-R.; Formal Analysis — H.Z.A.Z. and R.A.F.A.-R.; Investigation — R.A.F.A.-R.; Resources — H.Z.A.Z. and R.A.F.A.-R.; Data Curation — H.Z.A.Z. and R.A.F.A.-R.; Writing — H.Z.A.Z. and R.A.F.A.-R.; Visualization — H.Z.A.Z.; Supervision — R.A.F.A.-R.; Project Administration — H.Z.A.Z.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M41

Received: 01.05.2025
Revised: 22.07.2025; 20.10.2025; 07.11.2025
Accepted: 26.11.2025
Published online: 28.11.2025

How to cite this paper: Zainy, H. Z. A., & Al-Rubaye, R. A. Z. (2025). The impact of implementing IFRS 18 on analyzing financial performance and enhancing investment decisions. Business Performance Review, 3(2), 105–118. https://doi.org/10.22495/bprv3i2p9