The Impact of Financial Flexibility on Financial Performance - The Mediating Role of Financing Mix: Evidence from listed Companies within Industrial and Manufacturing Sector in Egypt

This study aims to examine the mediating role of the financing mix in shaping the influence of financial flexibility on the financial performance of listed companies in Egypt's industrial and manufacturing sector. According to an empirical methodology, the study used secondary data collected from various sources covering the period from 2002 to 2020. The analysis focuses on three of the most prominent industry leaders: Eastern Company for Tobacco and Cigarettes, Misr Aluminum Company, and the Egyptian Financial and Industrial Company, with observations spanning from 2018 to the present. Two primary hypotheses were constructed and investigated by Panel Data Structural Equation Modelling (PDSEM) using Stata/MP 17 to validate these hypotheses. The results confirm the validity of the hypotheses and shed light on the interrelationships between the variables specified therein. Significantly, the findings are consistent with the expected theoretical results.
Several suggestions are made for future research. First, examining additional factors affecting the financial performance of Egyptian listed companies within the industrial and manufacturing sector. By including different time frames and a wider range of companies in this sector, the study could produce more comprehensive and varied results. Secondly, consideration should be given to extending this study from the industrial and manufacturing sector to other sectors. Analyzing multiple sectors can provide a broader understanding of how financial flexibility affects financial performance in different market segments. In this case, researchers must account and control, using control variables for each sector to isolate and demonstrate the difference between findings of each sector. Third, integrating external influences such as global health crises, political developments and socio-economic changes in the MENA region. Research on the effects of events such as the COVID-19 pandemic and ongoing geopolitical tensions can uncover how these factors shape the relationship between financial flexibility, financing mix, and financial performance. Fourth, examining the bidirectional effects between each pair of variables through Granger causality testing could provide valuable insights into the causal relationships between financial flexibility, financing mix, and financial performance. Finally, it could provide practical insights for decision-makers to explore how the influence of financial flexibility on financial performance changes when mediated by variables other than the financing mix. By following these directions, future research can deepen the understanding of how financial flexibility and financing mix interact to shape the performance of companies in different contexts and time periods, providing valuable insights for both companies and policymakers.