THE INFLUENCE OF TAXES ON THE INVESTMENT EFFICIENCY IN THE IRAQ STOCK EXCHANGE CONSIDERING THE COMPANY'S CHARACTERISTICS

Abstract

This research investigates the impact of taxation on investment efficiency within the Iraq Stock Exchange (ISE), with a focus on firm-level characteristics. The dataset comprises information from 35 firms listed on the ISE covering the period 2012 to 2023. The analysis employed multiple linear regression, with hypothesis testing and statistical evaluation conducted using EVIEWS 13. To address the study’s aim, the corporate tax rate was applied as the measure of taxation, whereas investment efficiency was assessed through a firm-specific equation reflecting the structural features of companies listed on the ISE. The findings reveal that higher corporate tax rates reduce investment efficiency. Moreover, the analysis shows that firm size and age exert no statistically significant influence on investment efficiency. In contrast, company performance, represented by return on assets and reported losses, is affected by tax rates. The results further suggest that a uniform tax framework may limit investment efficiency, although this restriction is less pronounced for firms with stronger operational outcomes and varies in the case of loss-incurring firms. Based on these results, the study advocates a reassessment of existing tax frameworks. Introducing more adaptable tax measures and enhancing the management of available resources may strengthen investment efficiency in the market and foster broader economic development.