Corporate Governance and Organizational Behavior Review / Volume 7, Issue 1, 2023 29 THE IMPLICATIONS OF IFRS ON THE CREDIT MARKET: EVIDENCE FROM THE EMERGING MARKET Sinan Salem Kasim Al-Shaikh * , Hussen Amran Naji Al-Refiay ** , Azher Subhi Abdulhussein ** * Corresponding author, Accounting Department, Faculty of Management and Economics, Mustansiriyah University, Baghdad, Iraq Contact details: Accounting Department, Faculty of Management and Economics, Mustansiriyah University, Baghdad, Iraq ** Accounting Department, Faculty of Administration and Economics, University of Karbela, Karbala, Iraq Abstract How to cite this paper: Al-Shaikh, S. S. K., Al-Refiay, H. A. N., & Abdulhussein, A. S. (2023). The implications of IFRS on the credit market: Evidence from the emerging market. Corporate Governance and Organizational Behavior Review, 7(1), 29–43. https://doi.org/10.22495/cgobrv7i1p3 Copyright © 2023 The Authors This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). https://creativecommons.org/licenses/by/ 4.0/ ISSN Online: 2521-1889 ISSN Print: 2521-1870 Received: 09.07.2022 Accepted: 16.01.2023 JEL Classification: G10, M41, M210 DOI: 10.22495/cgobrv7i1p3 Banks are usually assessed credit risk based on borrowers’ financial statements to monitor credit risk over the life of the lending contract (Beatty, 2008; Golubeva, 2020). Thus, this research examines the implications of mandatory International Financial Reporting Standards (IFRS) implementation on the rational investment decisions of lenders and borrowers in the emerging market (e.g., the Iraqi credit market). Quantitative data were collected, nearly 137000 credit/loan contracts and 500 debenture contracts of almost 750 individual companies. We separate the dataset into two periods, earlier and later IFRS implementation using interaction variables to extract other economic factors’ impact on loan contract stipulation. Even though enhancing the quality of financial statements is the most rational objective of IFRS adoption and implementation, the results show insignificant improvement. IFRS implementation has a limited effect in enhancing financial statements’ quality during the conversion period. This finding supports the view that economic advantages do not essentially contribute to the application of IFRS but depend on other considerations and the level of disclosure practices. Keywords: International Financial Reporting Standards (IFRS), Credit Market, Financial Sector, Financial Statements’ Quality Authors’ individual contribution: Conceptualization — S.S.K.A.-S.; Methodology — S.S.K.A.-S.; Formal Analysis — S.S.K.A.-S. Investigation — S.S.K.A.-S.; Resources — H.A.N.A.-R.; Writing — Original Draft — H.A.N.A.-R.; Writing — Review & Editing — A.S.A. Declaration of conflicting interests: The Authors declare that there is no conflict of interest. 1. INTRODUCTION The main reason for the International Financial Reporting Standards (IFRS) adoption-decision and implementation is to enhance the quality of financial statements (accounting reports) to improve stakeholders’ rational investment decisions. That is why IFRS is accepted as a single global business language 1 . The International Accounting Standards Board (IASB) worked with the US Financial 1 Around 125 countries require or permit the adoption/implementation of IFRS. Accounting Standards Board to revise the Conceptual Framework issued in March 2018. Qualitative characteristics of useful financial information were the core of the amended conceptual framework. Therefore, financial statements quality (FSQ) is firmly attributed to their ability to enhance investors’ rational investment decisions. Accordingly, accounting information significantly influences lenders and borrowers (Beatty, 2008). Banks and other lenders usually assess credit risk based on borrowers’ financial statements before making lending decisions and