Mohamed Rezk Omara

The environment for enterprise external financing has deteriorated recently, especially in the wake of the COVID-19 outbreak, which has severely restricted enterprise external financing options. Therefore, it is essential to implement efficient financial methods to encourage business growth. This paper intends to investigate the moderating effect of board financial expertise on the relationship between flexibility and investment efficiency of listed companies in Egypt. This study includes moderator and control variables to produce an empirical model and findings that are more reliable based on 592 sample observations collected as annual secondary data from 2014 to 2021. Generalized least squares, logistic regression, and panel-corrected standard error were employed in the analysis. Results indicate that a higher board financial expert’s ratio decreases investment efficiency and has a moderating effect on financial flexibility and investment efficiency. High proportions of flexibility affect investment efficiency. Robustness checks confirm the negative effect of board financial expertise on the relationship between flexibility and investment efficiency. In unpredictable times, financial flexibility can help firms meet capital needs and boost the effectiveness of their investment decisions. Therefore, to increase investment efficiency and support firm growth, firms should maintain their financial flexibility while tightening internal controls.

The global financial crisis increased uncertainty in economic policy. Firms manage challenges through business strategies and financial constraints and deal with crash risk more proactively to overcome these impediments. This paper investigates the mediating role of financial constraints in the association between business strategy and crash risk, and the type of business strategy that influenced crash risk in Egyptian firms from 2014 to 2021. Data were obtained from financial statements and reports available in the Thomson Reuters database. A total of 792 observations were collected, representing 99 Egyptian firms. The statistical techniques employed in the analysis included ordinary least squares, modified least squares, and path analysis. The results indicate that a higher financial constraint ratio increases crash risk and has a mediating effect on business strategy and crash risk. Results show a positive impact of prospector strategy on crash risk using OLS and GLS, in line with the bad news hoarding hypothesis. Further research shows that prospector strategies have a positive effect on financial constraints. Egyptian firms have higher levels of information asymmetry, which leads to adopting a prospector business strategy and exerts a more pronounced positive influence on the likelihood of crash risk. A robustness check confirms the positive effect of financial constraints as a mediator variable on the relationship between prospector business strategy and crash risk.