The impact of cash holding on stock returns in small and medium enterprises on the Egyptian Nile Stock Exchange

Abstract

This paper explores the impact of cash holdings on stock returns in small and medium enterprises. The sample includes 24 SMEs listed on the Egyptian Nile Exchange, excluding service firms, with a total of 96 observations from 2016 to 2019. Data was collected from financial statements and reports obtained through an information dissemination company in Egypt. This study uses a panel data analysis with comparing all results via ordinary least squares and the generalized method of moments. The findings show a statistically significant negative effect of cash holding on stock returns in small and medium enterprises on the Egyptian Nile Exchange. Further, the evidence shows that firms with higher levels of cash holding have higher investment alternatives and then lower stock returns. This result supports the agency theory that an increase in cash holding leads to managers exploiting cash resources to achieve personal benefits, thus increasing agency costs, lowering investment efficiency, and therefore lowering stock returns. The results support the trade-off between risk and return by using cash holding to finance operational activities and investing in higher investment alternatives and then lower stock returns.

Demand forecasting: AI-based, statistical and hybrid models vs practice-based models - the case of SMEs and large enterprises

“…As already mentioned by previous studies, SMEs have lower economic power (Metzker et al, 2021a), lower amount financial resources and assets (Civelek et al, 2020;Kliuchnikava, 2022;Rashed & Ghoniem, 2022), lower number of high quality workers (Hazudin et al, 2022;Siregar et al, 2022), more fragile structure (Civelek & Krajčík, 2022;Dvorsky et al, 2021) that cause them facing with more financial (Civelek et al, 2021;Ključnikov et al, 2021) and exporting problems (Ključnikov et al, 2022), higher costs (Çelik & Çevirgen, 2021;Bittucci et al, 2021;Msomi & Nzama, 2022), when implementing their market and financing decisions into the practice (Dvorský et al, 2020;Kocisova et al 2018;Samanta, 2022). In this regard, investigation of suitable statistical demand forecasting model for both SMEs and large enterprises might create a value addition for the related academic literature.…”

The Impact of Information Asymmetry on the Relationship Between Board Characteristics and Capital Structure

“…This study uses 96 companies listed on the Egyptian market with 672 observations except for financial sectors that exclude in this sample through the period 2014-2020 collected via the Thomson Reuters database. This study chooses this period because of political and economic stability in emerging markets like Egypt (Rashed, et al, 2018;Mohamed & Rashed, 2021;Shehata and Rashed, 2021;Rashed and Ghoniem, 2022). This table shows that three sectors included in the sample which possess real estate, food, beverages, construction, and materials sectors at 53.1% for all sectors in the sample, then come industrial goods and services, basic resources, chemicals, travel, and leisure; personal and household products at 36.5% of the total sample, then finally come in the last sectors in the sample each of telecommunication, healthcare & pharmaceuticals, oil & gas, retail and technology sectors at 10.4 % of the total sample.…”