Master Study: Impact of Operational Efficiency and Firnancial performance on Capital Structure using Earnings Management as a Moderator Variable

using the earning management as a moderator variable in the process of management decision making regarding the enhancing the balance of the firm capital structure. We use a sample of 65 listed non-financial companies in the Egyptian Stock Exchange (EGX) during the 7 years (2013-2019). Three panel models for estimating the three multiple linear panel regression equations used in this research to test the impact of operational efficiency, ROA, ROE, gross profit margin, current ratio, asset turnover, inventory turnover, Tobin’s Q ratio and firm size on capital structure using the earnings management as a moderator variable. Findings indicate that ROE, gross profit margin and firm size have a positive significant impact on company’ capital structure, while operational efficiency, ROA, Tobin’s Q ratio and all liquidity ratios used in the first regression model (current ratio, asset turnover and inventory turnover) have a significant negative relationship with capital structure. Moreover, findings indicate that the firm’ operational efficiency, gross profit margin and Tobin’s Q ratio have a positive significant impact on company’ earnings management, while ROA, ROE and all liquidity ratios used in the second regression model (current ratio, asset turnover and inventory turnover) have a significant negative relationship with earnings management. Finally, the statistical results shows that all the variables used in the third regression model namely, earnings management, Tobin’s Q ratio and firm size have a significant negative relationship with the capital structure of the firm.

Dr. Nevine Sobhy Abdel Megeid, PhD, CMA

Associate Accounting Professor

College of Management and Technology

Arab Academy for, Technology and Maritime Transport

Dr. Mohamed Hassan Abd - Elmageed ,PhD

Assistant Accounting Professor

Faculty of Commerce - Ain Shams University

Nouran Madgy Ahmed Hamdy Riad

Assistant Accounting Lecturer

  Faculty of Buisiness, Ain Shams University