Modeling the impact of managerial stability on the risk of free cash flow decline and the value of the company studied in the Iran and Iraq Stock Exchanges: A comparative analysis approach

Document Type : Research Paper

Authors

1 PhD student, Urmia University, Faculty of Economics and Management, Department of Accounting, Urmia, Iran.

2 Associate Professor, Urmia University, Department of Accounting, Faculty of Economics and Management, Urmia, Iran

3 Assistant Professor, Urmia University, Department of Accounting, Faculty of Economics and Management, Urmia, Iran.

Abstract

The present study aims to model the effect of managerial stability on the risk of free cash flow decline and firm value in the Iranian and Iraqi stock exchanges with a comparative approach.

In this study, a combination of advanced artificial intelligence models such as neural networks, reinforcement learning, and particle swarm optimization, as well as spatial measurement methods such as spatial logit and spatial error, were used to analyze data from 140 Iranian companies (during 1395 to 1402) and 29 Iraqi companies (during 2016 to 2023).

The results show that managerial stability in both markets has a positive and significant effect on reducing free cash flow risk and increasing firm value. However, the intensity and pattern of this effect are different in the two countries. In Iraq, managerial stability has a stronger effect and parallel spatial effects are observed, but in Iran, the intensity of the effect is lower and firms are competitive in the area of ​​behavioral risk and complementary in the area of ​​behavioral value. In both countries, the reinforcement learning method with a high coefficient of determination (0.96 in Iran and 0.91 in Iraq) and low prediction error performed best. However, the overall accuracy of the models in Iran (average 94%) is higher than in Iraq (average 90%), which is attributed to data quality and market transparency.

Management stability is effective in controlling risk and creating value in companies, but its effectiveness depends on the institutional and economic conditions of the markets.

Keywords

Main Subjects

References

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Journal of Accounting Advances
Volume 17, Issue 1
September 2025
Pages 263-332

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History

  • Receive Date: 15 April 2025
  • Revise Date: 27 July 2025
  • Accept Date: 20 August 2025

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