Impact of corporate governance practice and audit quality on capital structure decisions and financial performance: evidence from Egypt

Abstract EN

The purpose of this research is to investigate the effect of corporate governance practice (CGP) and audit quality (AQ) on capital structure decisions and financial performance of Egyptian firms listed on the Egyptian stock exchange.

accounting-based measures such as return on assets, current ratio, and leverage were used to evaluate capital structure decisions and financial performance, as well as independence, board size, CEO duality, audit committee independence, big 4 and firm size, and Tobin's Q as control variables.

secondary data from financial statements, board of director's reports, and corporate governance reports were used in the study.

the research sample consists of 36 non-financial companies listed on the 100 ESG index from 2015 to 2021.

the data is analysed using panel data regression.

the research findings revealed a negative relationship between board size and capital structure, a positive relationship between CEO duality and capital structure, no relationship between board independence and capital structure, a positive relationship between audit committee independence and capital structure, a positive relationship between big 4 and capital structure, a positive relationship between profitability (ROA) and capital structure, and a negative relationship between board independence and capital structure.

this is in reference to the variable's relationship to the capital structure.

regarding financial performance, the research discovered a negative relationship between board independence and profitability, a positive relationship between board size and profitability, a positive relationship between CEO duality and profitability, a negative relationship between board size and liquidity, a positive relationship between (independence of audit committee, big 4, board size) and profitability, and a positive relationship between independence of audit committee a and profitability.