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The effect of social and intellectual capital on fraud and money laundering in Iraq

Mahdi Salehi (Department of Economics and Management, Ferdowsi University of Mashhad, Mashhad, Iran)
Hasanain Ali Mohammed Al-Msafir (Ferdowsi University of Mashhad, Mashhad, Iran)
Saeid Homayoun (University of Gavle, Gävle, Sweden)
Grzegorz Zimon (Department of Banking and Finance, Rzeszów University of Technology, Rzeszów, Poland)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 16 February 2022

Issue publication date: 2 March 2023

817

Abstract

Purpose

This study aims to assess the relationship between intellectual and social capital and financial statement fraud and money laundering of Iraqi firms before and after the emergence of the Islamic State of Iraq and Syria (ISIS). In other words, this paper seeks to answer the question of “whether the intellectual and social capital can contribute favourably to fraud in financial statements and money laundering or not.”

Design/methodology/approach

For the study, the multivariate regression model is used for hypothesis testing. Research hypotheses have also been examined using a sample of 35 listed firms on the Iraqi Stock Exchange during 2012–2018, using the panel data technique-based multivariate regression pattern and fixed-effect model.

Findings

The results show a negative and significant relationship between social capital and intellectual capital, fraud in financial statements and money laundering. Besides, the results indicate a positive and significant effect of the interactive variable of ISIS on the relationship between social and intellectual capital and fraud in financial statements and money laundering.

Originality/value

Since this paper is the first study on such a topic in the emergent markets, it provides helpful information for the users, analysts and legal institutions about intellectual capital and social capital that contributes significantly to fraud and money laundering of business units. Moreover, the study results help the development of science and knowledge in this field and fill the existing gap in the literature.

Keywords

Citation

Salehi, M., Ali Mohammed Al-Msafir, H., Homayoun, S. and Zimon, G. (2023), "The effect of social and intellectual capital on fraud and money laundering in Iraq", Journal of Money Laundering Control, Vol. 26 No. 2, pp. 227-252. https://doi.org/10.1108/JMLC-12-2021-0142

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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