The Moderating Role of Product Market Competition in the Association between Managerial Ability and Financial Reporting Readability

Document Type : Original Article

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Accounting Department Faculty of Commerce Cairo Egypt

Abstract

This paper explores how managerial ability affects financial reporting readability and examines the moderated role of product market competition in the relationship between managerial ability and financial reporting readability. Using a sample of 48 non-financial Egyptian companies listed on the EGX100 with 432 observations through the period 2013–2021 and depending on Ordinary Least Squares (OLS) and the Generalized Method of Moments (GMM) regression models, Results exhibit that there is a negative impact of managerial ability on financial reporting readability. Moreover, product market competition has a negative effect on financial reporting readability. Nevertheless, the results show that product market competition moderates the negative effect of managerial ability on financial reporting readability in both OLS and GMM models. A robustness check confirms the positive impact of product market competition on the association between managerial ability and financial reporting readability.

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