Financial flexibility and investment efficiency: The moderating role of board financial expertise
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Received June 28, 2023;Accepted November 8, 2023;Published November 27, 2023
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Author(s)Link to ORCID Index: https://orcid.org/0000-0002-9437-813XLink to ORCID Index: https://orcid.org/0000-0002-3782-1895
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DOIhttp://dx.doi.org/10.21511/imfi.20(4).2023.23
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Article InfoVolume 20 2023, Issue #4, pp. 283-296
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Cited by1 articlesJournal title: Investment Management and Financial InnovationsArticle title: Business strategy and stock price crash risk: The mediating role of financial constraintsDOI: 10.21511/imfi.21(3).2024.09Volume: 21 / Issue: 3 / First page: 96 / Year: 2024Contributors: Mohamed Rezk Omara, Ahmed Rashed
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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.
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JEL Classification (Paper profile tab)G39, M41, G50
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References62
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Tables8
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Figures1
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- Figure 1. Association between financial flexibility and over-investment
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- Table 1. Industries pertinent to the sample
- Table 2. Measurements of variables
- Table 3. Descriptive statistics
- Table 4. Correlation matrix
- Table 5. Diagnostics check
- Table 6. Regression analysis with PCSE & GLS
- Table 7. Financial flexibility effect with PCSE and GLS
- Table 8. Robustness test by using logistics regression
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Conceptualization
Mohamed Rezk Omara
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Data curation
Mohamed Rezk Omara
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Formal Analysis
Mohamed Rezk Omara
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Funding acquisition
Mohamed Rezk Omara
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Investigation
Mohamed Rezk Omara
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Methodology
Mohamed Rezk Omara
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Validation
Mohamed Rezk Omara
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Visualization
Mohamed Rezk Omara
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Project administration
Ahmed Rashed
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Resources
Ahmed Rashed
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Software
Ahmed Rashed
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Supervision
Ahmed Rashed
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Writing – original draft
Ahmed Rashed
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Writing – review & editing
Ahmed Rashed
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Conceptualization
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Is audit committee expertise connected with increased readability of integrated reports: Evidence from EU companies
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Investment Management and Financial Innovations Volume 19, 2022 Issue #1 pp. 1-13 Views: 926 Downloads: 468 TO CITE АНОТАЦІЯThe health sector in Morocco is marked by many achievements, but also by large deficits, especially in terms of healthcare expenditures borne by individuals. With the introduction of Islamic banks (called participative banks) in Morocco, the study aims to determine the extent to which Ijara Forward, as an Islamic financial contract, is adapted to the expectations of Moroccans to finance their health expenditures.
The study sample consisted of 200 individuals. The univariate and bivariate analyses are used to identify possible relationships between the study variables. In addition, this paper proposes a model that will predict the demand for Ijara Forward based on the logistic regression method.
The results reveal that the financial characteristics of the Ijara Forward contract are in line with the financial expectations of Moroccan individuals. Furthermore, the cost of health services is the main factor that makes healthcare inaccessible. This factor influences the demand of Ijara Forward. In addition, this paper reveals that religious beliefs stimulate Ijara Forward’s demand and encourages people to pay a higher price for Ijara Forward. -
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