The Moderating Effect of the Female Representation in the Board of Directors on the Relationship between Managerial Myopia and the Speed of Financial Leverage Adjustment: Evidence from Egyptian Listed Firms

Document Type : Original Article

Authors

1 faculty of commerce, Cairo university

2 Teacher in the Accounting Department Faculty of commerce, Cairo University

Abstract

This research aims to investigate whether Egyptian listed firms adjust their financial leverage to reach the targeted level. Also, it examines the relationship between managerial myopia (MYO) and the speed of leverage adjustment (SOA). Additionally, it explores whether female representation in the board of directors (GDIV) has a moderating effect on the relationship between MYO and SOA. To attain such objectives, an applied study has been conducted on a sample of 65 Egyptian listed firms from 2014 to 2021.
Using the Generalized Method of Moments (GMM), several findings were reached. First, Egyptian firms partially adjusted their leverage to reach the targeted level, and SOA ranged between 28.9% and 31.9%. Second, there is an inverse relationship between MYO and SOA, which means that firms whose managers are characterized by MYO have a deceleration in the SOA. Third, there is an inverse relationship between the GDIV and SOA, which means that the higher the GDIV, the lower the SOA. Fourth, the GDIV moderates the relationship between MYO and SOA, which means that firms whose managers are characterized by MYO and have a high GDIV are slower in adjusting their financial leverage than firms without such characteristics.
Additional tests using another measure of MYO also indicated an inverse relationship between MYO and SOA, which confirms the validity of the main tests' results.

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