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Abstract

The objective of this paper is to investigate the effect of the earnings ratio and capital structure on share price, with special focus on the moderating role of free cash flow (FCF) in the manufacturing sector listed on the Iraqi Stock Exchange (ISX) for the period 2016 to 2023. Using a quantitative research method, the study draws data from audited financial statements, including the income statement, balance sheet, and cash flow statement, and analyzes 10 manufacturing companies over eight years. The analysis employs a regression model, descriptive statistics, correlation analysis, ANOVA, and tests of cross-sectional dependence and non-stationarity to ensure diagnostic robustness of the results. The findings reveal that ROA has a statistically significant positive effect on share price, suggesting that investors reward companies that use their assets efficiently to generate profits, whereas ROE shows an insignificant negative correlation with share price, indicating that higher equity returns do not necessarily translate into higher market valuations, possibly due to investor concerns or external economic conditions. Regarding capital structure, DER demonstrates a positive relationship with stock prices, implying that moderate levels of debt may signal confidence and growth potential, while DAR has a negative effect, reflecting investor caution toward firms with high levels of total debt. Interestingly, the moderating role of FCF produces similar results in some variables, suggesting that although FCF is important, its effects may be different. This study is limited to the manufacturing sector on the Iraqi Stock Exchange and future research may explore its other sectors.

DOI

10.33095/2227-703X.4352

Subject Area

Accounting

First Page

83

Last Page

94

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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