Accounting Measurement of Innovation Cost and Its Impact on Firm Performance

Öz

Although innovation is widely recognized as a key driver of competitiveness and sustainable growth, its accounting measurement and impact on firm performance remain understudied, especially in emerging economies. This study examines the impact of innovation costs on firm performance, as measured by return on assets (ROA) and share price, using data from 36 Iraqi industrial and service firms listed on the Iraqi Capital Market from 2013 to 2023. Drawing on accounting and innovation theories, the study uses panel data regression analysis to determine if firms that invest more in innovation achieve better financial and market results. The findings reveal that innovation costs positively and significantly affect both the ROA and the share price, reveal that innovation spending enhances operational efficiency, profitability, and investor confidence. These results emphasize the strategic importance of recognizing innovation expenditures as value-creating investments rather than as short-term costs. This study contributes to the growing body of literature on innovation accounting in developing markets, providing practical insights for policymakers, managers, and investors. By highlighting the measurable benefits of innovation spending, the study raises awareness of the need to support innovation-driven strategies to strengthen firm performance and promote long-term economic development in Iraq and similar economies.

Anahtar Kelimeler

• Accounting Measurement
• Innovation Cost
• Firm Performance
• Return on Assets
• Share Price

Kaynakça

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