Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You and Your Team.

Learn More →

Does the efficiency of corporate governance and intellectual capital affect a firm's financial distress? Evidence from Egypt

Does the efficiency of corporate governance and intellectual capital affect a firm's financial... Using data on 51 firms traded in the Egyptian Exchange from 2014 to 2016, this paper aimed to assess the efficiency of corporate governance (CG) and intellectual capital (IC) practices and to explore their influence on the probability of a firm's financial distress.Design/methodology/approachThe relative efficiency of CG and IC practices has been measured under the Malmquist data envelopment analysis model. A modified Z-score model was applied to assess firms' financial distress.FindingsThe Wilcoxon signed-rank test revealed almost insignificant evidence regarding the improvement of CG and IC efficiency over the study period. The efficiency score of CG practices had no impact on the likelihood of financial distress. However, the efficiency score of IC negatively affected the probability of financial distress.Research limitations/implicationsThe integration of data envelopment analysis with Tobit regression was required for identifying the significant drivers of efficient CG and IC.Practical implicationsThe findings shed light on the role of CG and IC in alleviating the degree of financial distress in Egypt as an emerging market, especially the need to raise firms' compliance with the Egyptian CG code from a voluntary to mandatory status.Originality/valueThis study, using Malmquist data envelopment analysis, is among the first attempts to assess the relative efficiency of CG and IC practices and their effects on financial distress. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Capital Emerald Publishing

Does the efficiency of corporate governance and intellectual capital affect a firm's financial distress? Evidence from Egypt

Loading next page...
 
/lp/emerald-publishing/does-the-efficiency-of-corporate-governance-and-intellectual-capital-0NKNKan1yK
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1469-1930
DOI
10.1108/jic-06-2019-0143
Publisher site
See Article on Publisher Site

Abstract

Using data on 51 firms traded in the Egyptian Exchange from 2014 to 2016, this paper aimed to assess the efficiency of corporate governance (CG) and intellectual capital (IC) practices and to explore their influence on the probability of a firm's financial distress.Design/methodology/approachThe relative efficiency of CG and IC practices has been measured under the Malmquist data envelopment analysis model. A modified Z-score model was applied to assess firms' financial distress.FindingsThe Wilcoxon signed-rank test revealed almost insignificant evidence regarding the improvement of CG and IC efficiency over the study period. The efficiency score of CG practices had no impact on the likelihood of financial distress. However, the efficiency score of IC negatively affected the probability of financial distress.Research limitations/implicationsThe integration of data envelopment analysis with Tobit regression was required for identifying the significant drivers of efficient CG and IC.Practical implicationsThe findings shed light on the role of CG and IC in alleviating the degree of financial distress in Egypt as an emerging market, especially the need to raise firms' compliance with the Egyptian CG code from a voluntary to mandatory status.Originality/valueThis study, using Malmquist data envelopment analysis, is among the first attempts to assess the relative efficiency of CG and IC practices and their effects on financial distress.

Journal

Journal of Intellectual CapitalEmerald Publishing

Published: Jun 3, 2020

Keywords: Corporate governance index; Intellectual capital performance; Relative efficiency; Financial distress; Egypt

References