The effect of managerial ownership on the performance of listed firms in the Egyptian Exchange Market

Abstract

The main purpose of this study is to empirically examine the effect of managerial ownership and governance mechanisms (i.e.: Leverage, the percentage of Board directors) on corporate performance. The paper extends the previous literature in this area and provides evidence on this effect using a sample of the most 50 active firms published by Egyptian Exchange (EGX) to cover the last eight financial years from 2010 to 2017. The needed data were found to be available for 34 firms covering 11 different industrial sectors. The panel data method is used to examine the effect of managerial ownership and governance mechanisms on firm performance (Tobin’s q). The results reveal that all model is significant, and The coefficient of determination(R²) is 71.58% without any common econometrics problems in that model The results showed that there is a significant relation between (managerial ownership, assets turnover, leverage, liquidity, growth opportunity) as a governance mechanism which limits the agency problem and contributes to firm value increasing. Also has found some variables which insignificant and that was the opposite of many literature reviews and theories (firm size, systematic risk, dividends per share, dummy variable).