أثر جودة حوكمة الشركات والتدفقات النقدية التشغيلية على سرعة تعديل هيكل رأس المال: دراسة تطبيقية

Abstract EN

The main objective of this study is to test the impact of corporate governance quality and operating cash flow on capital structure adjustment speed using the generalized method of moments (GMM).

the study was conducted on a sample of 42 non-financial companies listed in the Egyptian stock exchange which belong to 4 sectors during the period from 2018 to 2021 with a total of 168 observations.

the study concluded with four results, firstly: the speed of adjustment (SOA) to the optimal capital structure varies according to the institutional environment in which the companies operate, which is reflected in the prevailing conditions at the macro level or the unique characteristics of each company.

where the results showed that there was a positive impact for each of the financial leverage of the previous year, firm size, and firm’s growth rate on SOA.

additionally, there was a negative impact for each of profitability and GDP on SOA, where SOA was estimated at 35.5%.

secondly, companies with larger board sizes and dual CEO tend to adapt more slowly to the optimal capital structure, as SOA decreased to 32% in those companies, while board independence and the percentage of women represented in it had no impact on SOA.

thirdly, foreign ownership plays a controlling role in reducing agency costs and optimal capital structure decisions, accordingly SOA increased to 42%.

however, family ownership and managerial ownership had no impact on SOA.

fourthly, there was a negative impact of the operating cash flow on SOA, while there was an insignificant impact of cash flow volatility on SOA.

accordingly, SOA decreased to 21%, this means that companies often deviate from the optimal capital structure when cash flow is insufficient to adjust the partial deviation from target leverage.