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Article
Publication date: 21 November 2016

Tarek Eldomiaty, Ibrahim Safwat Lotfy, Mohamed Rashwan and Mohamed Bahaa El Din

The uncertainty that surrounds oil and gas exploration environments call for an examination at different angles. In terms of robustness, the purpose of this paper is to focus on…

770

Abstract

Purpose

The uncertainty that surrounds oil and gas exploration environments call for an examination at different angles. In terms of robustness, the purpose of this paper is to focus on three performance measurements: the amount of exploration investments, the growth rate of exploration investments, and the value at risk (VaR) of exploration investments.

Design/methodology/approach

The study utilizes the properties of discriminant analysis for deriving Z-score models that can be used for monitoring firms’ performance. A cointegration analysis is utilized as well in order to examine the level of cointegration between predictors of each performance measure. The sample includes annual data for 41 firms (local and multinational) working in the oil and gas industry in Egypt for the period 2009-2014.

Findings

The results show that amount and growth of exploration investment are quite robust performance measures in the oil and gas industry; VaR of exploration investment is sporadic as it firm-specific; and GDP, capital expenditure and operating expenditure are quite relevant for managing and monitoring growth of exploration investments.

Originality/value

The study offers robust evidence that amount and growth of exploration investment are quiet relevant for measuring firm performance in the oil and gas industry.

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Publication date: 27 November 2017

Tarek Ibrahim Eldomiaty, Islam Azzam, Mohamed Bahaa El Din, Wael Mostafa and Zahraa Mohamed

The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model…

Abstract

The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (POT). The External Funds Needed (EFN) model offers a financing hierarchy that can be used for examining the POT. As far as the EFN considers growth of sales as a driver for changing capital structure, it follows that shall firms plan for a sustainable growth of sales, a sustainable financing can be reached and maintained. This study uses data about the firms listed in two indexes: Dow Jones Industrial Average (DJIA30) and NASDAQ100. The data cover quarterly periods from June 30, 1999, to March 31, 2012. The methodology includes (a) cointegration analysis in order to test for model specification and (b) causality analysis in order to show the generic and mutual associations between the components of EFN. The results conclude that (a) in the majority of the cases, firms plan for an increase in growth sales but not necessarily to approach sustainable rate; (b) in cases of observed and sustainable growth of sales, firms reduce debt financing persistently; (c) firms use equity financing to finance sustainable growth of sales in the long run only, while in the short run, firms use internal financing, that is, retained earnings as a flexible source of financing; and (d) the EFN model is quite useful for examining the hierarchy of financing. This study contributes to the related literature in terms of utilizing the properties of the EFN model in order to examine the practical aspects of the POT. These practical considerations are extended to examine the use of the POT in cases of observed and sustainable growth rates. The findings contribute to the current literature that there is a need to offer an adjustment to the financing order suggested by the POT. Equity financing is the first source of financing current and sustainable growth of sales, followed by retained earnings, and debt financing is the last resort.

Details

Growing Presence of Real Options in Global Financial Markets
Type: Book
ISBN: 978-1-78714-838-3

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Available. Content available
Book part
Publication date: 27 November 2017

Abstract

Details

Growing Presence of Real Options in Global Financial Markets
Type: Book
ISBN: 978-1-78714-838-3

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Article
Publication date: 17 April 2024

Bahaa Saleeb Agaiby Bakhiet

This study aims to examine the correlation between the readability of financial statements and the likelihood of future stock price crashes in nonfinancial companies listed on the…

819

Abstract

Purpose

This study aims to examine the correlation between the readability of financial statements and the likelihood of future stock price crashes in nonfinancial companies listed on the Egyptian Stock Exchange. It further explores the possible moderating effect of audit quality on this relationship.

Design/methodology/approach

The study uses ordinary least squares regression, generalized least squares estimation and two-stage least squares methodology to examine and validate the research hypotheses. The sample comprises 107 nonfinancial companies registered on the Egyptian Stock Exchange from 2016 to 2019.

Findings

The results reveal a significant negative association between the readability of financial statements and stock price crash risk. This suggests that companies with more complex financial statements tend to experience higher future crash risks. Additionally, the study identifies audit quality as a significant moderating factor. Higher audit quality, often indicated by engagements with Big-4 audit firms, strengthens the influence of financial statements readability on stock price crash risk. This implies that while high audit quality enhances investor confidence and market stability, it also accentuates the negative consequences of complex financial statements.

Practical implications

The findings of this paper have significant implications for regulators and standard-setting bodies in Egypt. They should consider refining and revising existing standards to emphasize the importance of enhancing the readability of financial reports. Additionally, auditing firms should actively engage in efforts to ensure clearer and more transparent financial reporting. These actions are vital for boosting investor confidence, strengthening Egypt’s capital market and mitigating potential risks associated with information opacity and complexity.

Originality/value

This study represents a pioneering endeavor within the Arab and Egyptian financial environments. To the best of the author’s knowledge, it is the first examination of the association between the readability of financial statements and stock price crash risk in these contexts. Furthermore, it explores factors such as audit quality that may influence this connection.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

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Available. Content available
Article
Publication date: 8 February 2022

Reza Monem

1082

Abstract

Details

Accounting Research Journal, vol. 35 no. 1
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 18 April 2022

Fatima Al Maeeni, Nejla Ould Daoud Ellili and Haitham Nobanee

This study aims to investigate the extent and trend of corporate social responsibility (CSR) disclosure by UAE listed banks and the impact of corporate governance mechanisms on…

894

Abstract

Purpose

This study aims to investigate the extent and trend of corporate social responsibility (CSR) disclosure by UAE listed banks and the impact of corporate governance mechanisms on this disclosure.

Design/methodology/approach

Content analysis of banks’ annual reports from 2009 to 2019 was applied to investigate the CSR disclosure level by constructing a disclosure index. Panel data regressions were applied to analyze the impact of corporate governance mechanisms on CSR disclosure.

Findings

UAE banks show an improving trend in the CSR disclosures. In addition, the board of directors and ownership structure are significantly and positively associated with the CSR disclosures. The results vary across the banking systems.

Research limitations/implications

This study considers the extent of the CSR disclosure in UAE banks’ annual reports, and future research should consider more industries and communication channels.

Practical implications

This study sheds light on the extent of the CSR disclosure of UAE listed banks and assists UAE policymakers in implementing appropriate corporate governance mechanisms.

Social implications

The findings provide banks with a better understanding of the benefits of strengthening corporate governance to improve their CSR disclosure.

Originality/value

This study contributes to the literature by constructing a more comprehensive disclosure index and examining the impact of corporate governance mechanisms on CSR disclosure by considering both the conventional and Islamic banking systems.

Details

Journal of Financial Reporting and Accounting, vol. 22 no. 4
Type: Research Article
ISSN: 1985-2517

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