No abstract

The central bank of Egypt (CBE) has obligated the Egyptian banks as of 2019 to apply IFRS 9 to provide more timely information about the expected credit losses (ECL). However, the implementation of IFRS 9 concerning the ECL requires a significant judgment that may lead to opportunistic accounting behavior. This research aims to examine the impact of the expected credit loss (ECL) model under IFRS 9 on loan loss recognition timeliness (LLRT) of the Egyptian banks, and also investigates the moderating effect of corporate governance (CG) efficiency namely: board size (BSIZE), board independence (BIND), institutional ownership (INSTIT), CEO duality (DUAL), and audit quality (AQ). The research uses data extracted from the quarterly financial reports for a sample of Egyptian banks from 2018 to 2019, the data were processed using the panel corrected standards errors (PCSE). The results reveal a significant positive effect of applying the ECL model on LLRT, also, the results show a positive effect of BIND on the association between ECL model and LLRT, conversely, there is a negative effect of DUAL, while, there is no effect for each of BSIZE, INSTIT, and AQ. This research introduces early empirical evidence from the emerging markets about the implications of the ECL model under IFRS 9, the research results are important for regulators and investors because it supports the effectiveness of the new model, also, the results are important for future reform programs undertaken by regulators in Egypt such as CBE, moreover, the research adds to the literature of LLRT, by providing evidence regarding the effect of applying the ECL model on LLRT.

The aim of this research is three-fold as (i) to test the influence of the related party transactions (RPTs) on the Egyptian firm performance (FP), (ii) to test the moderating effect of audit quality (AQ) on this relation, and (iii) to investigate the effect of transaction type and related party (RP) nature/type on FP. The research uses a sample of listed firms on the Egyptian Stock Exchange from 2013 to 2019 as the basis for the analysis. The data is analyzed using the panel corrected standards errors (PCSE), and the generalized least squares (GLS). The results suggest that (i) RPTs have a negative effect on ROA and Tobin's Q, (ii) and AQ decreases the negative effect of RPTs on ROA and increases this negative effect on Tobin's Q. (iii) Further tests show that purchase transactions with RPs positively affect ROA, while the sale transactions negatively affect ROA, additionally, there is a negative effect of the financing transactions on ROA and Tobin's Q. Concerning the effect of RP type, the results reveal that transactions with management/board and associates have a positive effect on ROA, and transactions with the joint ventures have a negative effect. Besides, the results indicate a negative effect of the transactions with the subsidiaries, joint ventures and associates on Tobin's Q. This research would help policymakers and investors; where it provides evidence about the consequences of the RPTs, also, it contributes to the existing literature of RPTs, where it provides evidence from one of the emerging markets; Egypt, on the impact of RPTs on FP.