AN EMPIRICAL STUDY ON EGYPTIAN  FIRMS FROM 2010 T0 2021

Mostafa  Abdelrahman Hussein

doi:10.46306/bbijbm.v4i3.112

Authors

Mostafa Abdelrahman Hussein Technology & Maritime Transport, Graduate School of Business, Arab Academy for Science,

DOI:

https://doi.org/10.46306/bbijbm.v4i3.112

Keywords:

Capital Structure mix, Capital Structure, Financial Structure, Leverage, Capital structure theories, Firm’s characteristics, Macro-economic variables, Micro economic variables, pecking order theory, Trade off theory, Information asymmetry, Agency theory, corporate governance, Credit rating, Capital structure in developing countries, Capital structure in developed countries, Investment decision

Abstract

The purpose of this study is to carry out empirical testing, using panel data methodology for the period of 2010 to 2021 using data of nun financial organizations in EGX30 with 228 observations, to examine the impact of firm’s characteristics and Macro on the corporate capital structure decisions of Egyptian firms.

This study deploys five independent variables that represent firm’s characteristics - tangibility of assets, profitability, growth Opportunities, size, and Liquidity. In addition to five moderating variables that represent country’s specific factors- net foreign direct investment, nominal gross domestic product, interest rate corridor, inflation and Brent crude oil prices,

the results indicate that liquidity, profitability and tangibility are important determinants of capital structure with negative effect on leverage on other hand the size has significant positive effect on leverage. And no significant relation between growth opportunity and leverage

The study reveals that GDP has moderation effect on the relation between liquidity and the leverage and no moderation effect on the tangibility, size, profitability margin, and growth opportunity with leverage.

FDI is found to have a significant moderating effect on the relationship between tangibility, profitability margin, liquidity, and growth opportunity with leverage. FDI does not significantly moderate the relationship between Size and leverage.

The inflation rate does not significantly moderate the relations with any of the micro and Leverage

Interest rate is found to have a significant moderating effect on the relationship between, profitability margin and liquidity with leverage. And found no significant moderating effect on the relationship between size, tangibility and growth opportunity with leverage

Brent Crude does not significantly moderate the relationship between Tangibility, Size, and Profitability margin with leverage, it does moderate the relationship between Liquidity and leverage, as well as the relationship between Growth Opportunity and leverage.

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