Measuring the Impact of the Interactive Relationship between Managerial Ability and Earnings Management Practices on Cash Holdings Level: An Applied Study on Non-Financial Companies Listed on the Egyptian Stock Exchange

Research objective: the study aimed to measure the impact of the interactive relationship between managerial ability and earnings management practices on cash holdings level for non-financial companies listed on the Egyptian Stock Exchange.
Research methodology: The study relied on the descriptive analytical approach, which combines both theoretical analysis of the most important various literature related to the research topic, and also conducting an applied study that relied on the content analysis approach in examining the actual historical data in the annual financial statements for a sample of (128) companies listed on the Egyptian Stock Exchange during the period from 2010 to 2020, with a total number of 1408 observations, to test the research hypotheses that reflect the impact of the interactive relationship between managerial ability and earnings management practices on cash holdings level, using a set of statistical methods represented in the Pearson correlation coefficient and the linear regression model.
Research results: The results of this research indicate: First, there is a significant positive effect of managerial ability on Accrual-based Earnings Management for non-financial companies listed on the Egyptian Stock Exchange. Second, there is a significant negative effect of managerial ability on Real Earnings Management for non-financial companies listed on the Egyptian Stock Exchange. Third, there is a significant positive effect of managerial ability on the cash holdings level for non-financial companies listed on the Egyptian Stock Exchange. Fourth, there is insignificant effect of the interactive relationship between managerial ability and Accrual-based Earnings Management on cash holdings level for non-financial companies listed on the Egyptian Stock Exchange. Fifth, there is a significant negative effect of the interactive relationship between managerial ability and Real Earnings Management on cash holdings level for non-financial companies listed on the Egyptian Stock Exchange.
Originality/ value: The scientific contribution of this research represented in its treatment of an important controversial issue in academic accounting research, which is the issue of earnings management practices and its relationship to the managerial ability and cash holdings level. Especially, the previous studies that were conducted inside Egypt -Within the limits of what the researcher has seen- didn't care about addressing directly and in detail the effect of the interactive relationship between managerial ability and earnings management practices on cash holdings level for non-financial companies listed on the Egyptian Stock Exchange.This research is also represents a continuation to the capital market researches, and thus investors, company managers and other stakeholders can benefit from its findings in rationalizing the financial and investment decisions.