MEASURING MARKET RISK IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS USING VALUE AT RISK: AN APPLIED STUDY IN BAGHDAD SOFT DRINKS COMPANY

Abstract

The research aims to identify and measure market risks that have been referred to within the international financial reporting standards in preparation for disclosure in the financial statements and its impact on any of the income and balance sheet elements to help users, chiefly investors and creditors, improve their knowledge of the financial position of companies and take the right decision.

In order to achieve the objective of the research, the researchers adopted the deductive approach for literature review by collecting previous sources and studies. Through the applied study the researchers used the data of trading prices in the Iraq Stock Exchange (of the Baghdad Soft Drinks Company) for 2019 to measure the market risk referred to in IFRSs by covariance - covariance method for estimating the value at risk to show how the Company's equity and annual profits affected as a result of its exposure to market risks.

The research concluded that there is no unified methodology for measuring the risks referred to by IFRSs. So, the most important recommendations is for the International Accounting Standards Board to provide a unified methodology for measuring risks and obligating all economic units that apply IFRS to submit their financial data, including information for measuring risks exposed to, for enhancing the qualitative characteristics of accounting information in the service of economic decision-makers.