The Role of Accounting Measurement and Disclosure of Social Capital in Improving Financial Performance
This research aims to investigate the role of accounting measurement and disclosure of social capital (AMDSC) in improving financial performance (FP) in industrial companies in the Kurdistan Region of Iraq-Sulaimani City (KRG). This study uses SPSS to analyze the questionnaire that was sent to 10 industrial companies operating in the iron sector during 2021. Since there is no financial indicator to measure social capital, but it can be measured through a questionnaire at the individual level, therefore this paper uses a questionnaire for this purpose. The outcomes disclose that AMDSC has a significant effect on improving the FP of industrial companies in KRG. SC has a significant influence on FP as it is approved. Thus, this suggests that SC needs to be considered in the companies’ strategy to secure future financing in this area. This paper is limited to the iron sector of KRG/Sulaimani city. Future studies could address other fields, such as management, for instance, the effect of SC in business management or sharing knowledge. Or financial accounting, for example, the role of SC in improving profitability or liquidity, and so on. This paper focuses on improving financial performance in industrial companies in KRG and Sulaimani City through considering social capital in their companies’ strategies, as there was no concern for SC in KRG before.
Aly, D., El-Halaby, S. and Hussainey, K., 2018. Tone disclosure and financial performance: evidence from Egypt. Accounting Research Journal.
Akkas, E., & Asutay, M. (2022). Intellectual capital disclosure and financial performance nexus in Islamic and conventional banks in the GCC countries. International Journal of Islamic and Middle Eastern Finance and Management.
Andersson, A.B., 2021. Social capital and self-efficacy in the process of youth entry into the labour market: Evidence from a longitudinal study in Sweden. Research in Social Stratification and Mobility, 71, p.100580.
Barauskaite, G. and Streimikiene, D., 2021. Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), pp.278-287.
Bhattu-Babajee, R. and Seetanah, B., 2021. Value-added intellectual capital and financial performance: evidence from Mauritian companies. Journal of Accounting in Emerging Economies.
Bolívar, M.P.R., Galera, A.N., Subirés, M.D.L. and Muñoz, L.A., 2018. Analysing the accounting measurement of financial sustainability in local governments through political factors. Accounting, Auditing & Accountability Journal.
Budur, T. (2018). The impact of Al-Ghazali’s virtues on organizational commitment and performance: A case Study at private education institutions in Kurdistan Region of Iraq. Icabep, Erbil-Iraq, 2, p21.
Budur, T. (2020). Impact of Transformational Leadership on Customer Satisfaction: Mediating effects of Employee Performance and Organizational Citizenship Behaviors. (Unpublished doctoral dissertation). International Burch University.
Budur, T., & Poturak, M. (2021a). Transformational leadership and its impact on customer satisfaction. Measuring mediating effects of organisational citizenship behaviours. Middle East Journal of Management, 8(1), 67-91.
Budur, T., & Poturak, M. (2021b). Employee performance and customer loyalty: Mediation effect of customer satisfaction. Middle East Journal of Management, 8(5), 453-474.
Cavaliere, L. P. L., Subhash, N., Rao, P. V. D., Mittal, P., Koti, K., Chakravarthi, M. K., ... & Regin, R. (2021). The Impact of Internet Fraud on Financial Performance of Banks. Turkish Online Journal of Qualitative Inquiry, 12(6), 8126-8158.
Chen, M.H., Wang, H.Y. and Wang, M.C., 2018. Knowledge sharing, social capital, and financial performance: The perspectives of innovation strategy in technological clusters. Knowledge Management Research & Practice, 16(1), pp.89-104.
Craig, R., & Diga, J. (1998). Corporate accounting disclosure in ASEAN. Journal of International Financial Management & Accounting, 9(3), 246-274.
Dahiyat, S.E., Khasawneh, S.M., Bontis, N. and Al-Dahiyat, M., 2021. Intellectual capital stocks and flows: Examining the mediating roles of social capital and knowledge transfer. VINE Journal of Information and Knowledge Management Systems.
Dai, W.D., Mao, Z.E., Zhao, X.R. and Mattila, A.S., 2015. How does social capital influence the hospitality firm's financial performance? The moderating role of entrepreneurial activities. International Journal of Hospitality Management, 51, pp.42-55.
Dar, I.A. and Mishra, M., 2020. Dimensional impact of social capital on financial performance of SMEs. The Journal of Entrepreneurship, 29(1), pp.38-52.
Easmon, R.B., Kastner, A.N.A., Blankson, C. and Mahmoud, M.A., 2019. Social capital and export performance of SMEs in Ghana: the role of firm capabilities. African Journal of Economic and Management Studies.
Gannon, B. and Roberts, J., 2020. Social capital: exploring the theory and empirical divide. Empirical Economics, 58(3), pp.899-919.
Hadžiahmetović, N., Demir, S., & Budur, T. (2022). Leadership Style and Affective Commitment at Family Businesses. International Journal of Social Sciences & Educational Studies, 9(1), 318-335.
Hameedi, K.S., Al-Fatlawi, Q.A., Ali, M.N. and Almagtome, A.H., 2021. Financial performance reporting, IFRS implementation, and accounting information: Evidence from Iraqi banking sector. The Journal of Asian Finance, Economics and Business, 8(3), pp.1083-1094.
Hassan, O.A. and Marston, C., 2019. Disclosure Measurement in the Empirical Accounting Literature-A Review Article. International Journal of Accounting.
Honig, B., 1998. What determines success? Examining the human, financial, and social capital of Jamaican microentrepreneurs. Journal of business venturing, 13(5), pp.371-394.
Ismael, B. A., Ahmed, R. A., Yaba, J. A., Hamawandy, N. M., Abdullah, R., Jamil, D. A., & Sulaiman, A. A. (2020). The Effects of Computerized Accounting System on Auditing Process: a Case Study from Northern Iraq. Solid State Technology, 63(5), 8564-8578.
Jaf, R. A. S., & hamid Ahmad, K. A. (2021). The Role of Accounting Mechanisms for Bank Governance in Improving the Quality of the Information Content of the Interim Financial Reports: An Exploratory Study of The Opinions of a Sample of Workers In Private Iraqi Banks Operating In The Kurdistan Region/Iraq. QALAAI ZANIST JOURNAL, 6(1), 279-305.
Jensen, R.E., 1971. A cluster analysis study of financial performance of selected business firms. The Accounting Review, 46(1), pp.36-56.
Jeong, S.W. and Chung, J.E., 2022. Enhancing competitive advantage and financial performance of consumer-goods SMEs in export markets: how do social capital and marketing innovation matter?. Asia Pacific Journal of Marketing and Logistics.
Kahihu, P.K., Wachira, D.M. and Muathe, S.M., 2021. Managing market risk for financial performance: experience from micro finance institutionin Kenya. Journal of Financial Regulation and Compliance.
Kalash, I., 2021. The financial leverage–financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis. EuroMed Journal of Business.
Karim, A. H. M., AL-Shatnawi, H. M., Jaf, R. A. S., Al-Kake, F., & Hamawandy, N. M. (2020). The role of adopting strategic audit to improve audit quality. management, 7(11), 2020.
Kung, C.S., 2020. Health in widowhood: The roles of social capital and economic resources. Social Science & Medicine, 253, p.112965.
Lee, W. J. (2015). Social capital as a source of business advantages for a woman entrepreneur in the context of small-size business. Asian Social Science, 11(12), 155.
Mahrani, M. and Soewarno, N., 2018. The effect of good corporate governance mechanism and corporate social responsibility on financial performance with earnings management as mediating variable. Asian Journal of Accounting Research.
Migdadi, M.M., 2022. Social capital impact on mass customization capability and innovation capabilities: the mediating role of absorptive capacity. Journal of Business & Industrial Marketing.
Mizushima, A., 2021. Child labor, social capital, and economic development. Review of Development Economics, 25(3), pp.1648-1667.
Mushafiq, M., Sindhu, M.I. and Sohail, M.K., 2021. Financial performance under influence of credit risk in non-financial firms: evidence from Pakistan. Journal of Economic and Administrative Sciences.
Oware, K.M., Valacherry, A.K. and Mallikarjunappa, T., 2021. Do third-party assurance and mandatory CSR reporting matter to philanthropic and financial performance nexus? Evidence from India. Social Responsibility Journal.
Polat, G. and Benligiray, S., 2022. The impact of family business professionalization on financial performance: a multidimensional approach. Journal of Small Business and Enterprise Development.
Poturak, M., Mekić, E., Hadžiahmetović, N., & Budur, T. (2020). Effectiveness of Transformational Leadership among Different Cultures. International Journal of Social Sciences & Educational Studies, 7(3), 119–129.
Prasetyo, P.E., Setyadharma, A. and Kistanti, N.R., 2020. Social Capital: The main determinant of MSME entrepreneurship competitiveness. International Journal of Scientific & Technology Research, 9(3), pp.6627-6637.
Rahi, A.F., Akter, R. and Johansson, J., 2021. Do sustainability practices influence financial performance? Evidence from the Nordic financial industry. Accounting Research Journal.
Rashid, C. A., Salih, H. A., & Budur, T. (2020). The Role of Online Teaching Tools on the Perception of the Students during the Lockdown of Covid-19. International Journal of Social Sciences & Educational Studies, 7(3), 178–190.
Rashid, C. A. (2017). The Importance of Audit Procedure in Collecting Audit Evidence/Case of Kurdistan Region/Iraq. International Journal of Social Sciences & Educational Studies, 4(2), 15.
Rashid, C. A. (2018). Efficiency of financial ratios analysis for evaluating companies’ liquidity. International Journal of Social Sciences & Educational Studies, 4(4), 110.
Rashid, C. A. (2019). Pricing policy and its impact on the profitability. International Journal of Finance & Banking Studies, 8(3), 101-108.
Salehi, M., Al-Msafir, H.A.M., Homayoun, S. and Zimon, G., 2022. The effect of social and intellectual capital on fraud and money laundering in Iraq. Journal of Money Laundering Control.
Sands, J.S., Rae, K.N. and Gadenne, D., 2016. An empirical investigation on the links within a sustainability balanced scorecard (SBSC) framework and their impact on financial performance. Accounting Research Journal.
Sani, H., 2019. Do social capital and small and medium enterprise factors influence the performance of small businesses?.
Senn, J. and Giordano-Spring, S., 2020. The limits of environmental accounting disclosure: enforcement of regulations, standards and interpretative strategies. Accounting, Auditing & Accountability Journal.
Shabbir, M.S. and Wisdom, O., 2020. The relationship between corporate social responsibility, environmental investments and financial performance: evidence from manufacturing companies. Environmental Science and Pollution Research, 27(32), pp.39946-39957.
Shakil, M.H., Mahmood, N., Tasnia, M. and Munim, Z.H., 2019. Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks. Management of Environmental Quality: An International Journal.
Siddique, A., Khan, M.A. and Khan, Z., 2021. The effect of credit risk management and bank-specific factors on the financial performance of the South Asian commercial banks. Asian Journal of Accounting Research.
Straub, A.M., Gray, B.J., Ritchie, L.A. and Gill, D.A., 2020. Cultivating disaster resilience in rural Oklahoma: Community disenfranchisement and relational aspects of social capital. Journal of rural studies, 73, pp.105-113.
Sultan, N., & Mohamed, N. (2022). Financial intelligence unit of Pakistan: an evaluation of its performance and role in combating money laundering and terrorist financing. Journal of Money Laundering Control, (ahead-of-print).
Sung Kim, W. and Oh, S., 2019. Corporate social responsibility, business groups and financial performance: a study of listed Indian firms. Economic research-Ekonomska istraživanja, 32(1), pp.1777-1793.
Wallace, J. C., Little, L. M., Hill, A. D., & Ridge, J. W. (2010). CEO regulatory foci, environmental dynamism, and small firm performance. Journal of Small Business Management, 48(4), 580-604.
Wang, J., Wang, H., Yin, D. and Zhu, Y., 2021. The role of social capital in private placement: evidence from Rule 144A debt issuances. Managerial Finance.
Wattanawarangkoon, T., Sinthupundaja, J., Suppakitjarak, N. and Chiadamrong, N., 2022. Examining internal capability determinants on firms' financial performance before and after going public: a case of listed firms in Thailand. Journal of Advances in Management Research.
Wojciechowska, M., 2020. Social capital, trust and social activity among librarians: Results of research conducted in 20 countries across the world. Library & Information Science Research, 42(4), p.101049.
Xie, X., Hoang, T.T. and Zhu, Q., 2022. Green process innovation and financial performance: The role of green social capital and customers’ tacit green needs. Journal of Innovation & Knowledge, 7(1), p.100165.
Yahaya, A., Mahat, F., Yahya, M.H. and Matemilola, B.T., 2022. Liquidity risk and bank financial performance: an application of system GMM approach. Journal of Financial Regulation and Compliance.
Youjia, M., Qilin, C. and Benzhang, Y., 2021. Social Capital at Venture Capital Firms and Their Financial Performance in China. In E3S Web of Conferences (Vol. 253). EDP Sciences.
Zhang, Q. and Fung, H.G., 2006. China's social capital and financial performance of private enterprises. Journal of Small Business and Enterprise Development.
How to Cite
Copyright (c) 2023 Academic Journal of Nawroz University
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors retain copyright
The use of a Creative Commons License enables authors/editors to retain copyright to their work. Publications can be reused and redistributed as long as the original author is correctly attributed.
- The researcher(s), whether a single or joint research paper, must sell and transfer to the publisher (the Academic Journal of Nawroz University) through all the duration of the publication which starts from the date of entering this Agreement into force, the exclusive rights of the research paper/article. These rights include the translation, reuse of papers/articles, transmit or distribute, or use the material or parts(s) contained therein to be published in scientific, academic, technical, professional journals or any other periodicals including any other works derived from them, all over the world, in English and Arabic, whether in print or in electronic edition of such journals and periodicals in all types of media or formats now or that may exist in the future. Rights also include giving license (or granting permission) to a third party to use the materials and any other works derived from them and publish them in such journals and periodicals all over the world. Transfer right under this Agreement includes the right to modify such materials to be used with computer systems and software, or to reproduce or publish it in e-formats and also to incorporate them into retrieval systems.
- Reproduction, reference, transmission, distribution or any other use of the content, or any parts of the subjects included in that content in any manner permitted by this Agreement, must be accompanied by mentioning the source which is (the Academic Journal of Nawroz University) and the publisher in addition to the title of the article, the name of the author (or co-authors), journal’s name, volume or issue, publisher's copyright, and publication year.
- The Academic Journal of Nawroz University reserves all rights to publish research papers/articles issued under a “Creative Commons License (CC BY-NC-ND 4.0) which permits unrestricted use, distribution, and reproduction of the paper/article by any means, provided that the original work is correctly cited.
- Reservation of Rights
The researcher(s) preserves all intellectual property rights (except for the one transferred to the publisher under this Agreement).
- Researcher’s guarantee
The researcher(s) hereby guarantees that the content of the paper/article is original. It has been submitted only to the Academic Journal of Nawroz University and has not been previously published by any other party.
In the event that the paper/article is written jointly with other researchers, the researcher guarantees that he/she has informed the other co-authors about the terms of this agreement, as well as obtaining their signature or written permission to sign on their behalf.
The author further guarantees:
- The research paper/article does not contain any defamatory statements or illegal comments.
- The research paper/article does not violate other's rights (including but not limited to copyright, patent, and trademark rights).
This research paper/article does not contain any facts or instructions that could cause damages or harm to others, and publishing it does not lead to disclosure of any confidential information.