Financial distress and stock price crash risk in Egyptian firms

Q2 Economics, Econometrics and Finance Investment Management and Financial Innovations Pub Date : 2023-09-19 DOI:10.21511/imfi.20(3).2023.26

Asmaa Samir, Medhat AbdElRasheed Nofal, Ahmed Rashed, Manal Khalil

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引用次数: 1

Abstract

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.

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埃及公司的财务困境和股价崩盘风险

全球金融危机加剧了经济政策的不确定性。为了克服这些障碍，公司更积极地处理财务困境和崩溃风险问题。本文对2014-2021年期间埃及股市金融困境与崩盘风险之间的关系提供了新的见解，并提出了管理者如何加强坏消息囤积机制以获得优势。数据收集通过财务报表和报告获得从汤森路透数据库使用824年度观察103埃及公司通过广义矩和普通最小二乘法。运用OLS和GMM分析结果表明，金融困境对金融危机风险有显著的正向影响。研究结果支持了管理机会主义掩盖破坏公司经济基本面的坏消息的作用。这一发现支持了金融危机如何影响崩溃风险的代理理论。研究结果支持对替代金融危机和崩溃风险措施进行强有力的测试。

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来源期刊

Investment Management and Financial Innovations Economics, Econometrics and Finance-Finance

CiteScore

2.50

自引率

0.00%

发文量

审稿时长

11 weeks

期刊介绍： The international journal “Investment Management and Financial Innovations” encompasses the results of theoretical and empirical researches carried out both on macro- and micro-levels, concerning various aspects of financial management and corporate governance, investments and innovations (including using of quantitative methods). It is focused on the international community of financiers, both academics and practitioners. Key topics: financial and investment markets; government policy and regulation; corporate governance; information and market efficiency; financial forecasting and simulation; financial institutions: investment companies, investment funds, investment banks, hedge funds, private pension funds; objects of real and financial investing; financial instruments and derivatives; efficiency of investment projects; econometric and statistic methods in project management; alternative investments; ratings and rating agencies.