Ahmed Rashed

This paper explores the impact of cash holdings on stock returns in small and medium enterprises. The sample includes 24 SMEs listed on the Egyptian Nile Exchange, excluding service firms, with a total of 96 observations from 2016 to 2019. Data was collected from financial statements and reports obtained through an information dissemination company in Egypt. This study uses a panel data analysis with comparing all results via ordinary least squares and the generalized method of moments. The findings show a statistically significant negative effect of cash holding on stock returns in small and medium enterprises on the Egyptian Nile Exchange. Further, the evidence shows that firms with higher levels of cash holding have higher investment alternatives and then lower stock returns. This result supports the agency theory that an increase in cash holding leads to managers exploiting cash resources to achieve personal benefits, thus increasing agency costs, lowering investment efficiency, and therefore lowering stock returns. The results support the trade-off between risk and return by using cash holding to finance operational activities and investing in higher investment alternatives and then lower stock returns.

Economic policy uncertainty intensified as a result of the global financial crisis. To overcome these obstacles, firms handle issues with financial distress and crash risk more proactively. This paper offers new insights into the relationship between financial distress and crash risk on the Egyptian stock market during the period of 2014–2021 and presents how managers strengthen the bad news hoarding mechanism to their advantage. Data were collected via financial statements and reports obtained from the Thomson Reuters database using 824 annual observations of 103 Egyptian firms via the generalized method of moments and ordinary least squares. Results show a strong positive impact of financial distress on crash risk using OLS and GMM. Results support the role of managerial opportunism to cover up bad news that undermines a firm’s economic fundamentals. The findings support an agency theory of how financial distress affects crash risk. The findings support conducting robust tests for alternative financial distress and crash risk measures.

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.