Examining the Determinants of Financial Flexibility: The Egyptian Case

This paper identifies the key determinants of financial flexibility (FF), measured by low debt (debt flexibility (DF)) and excess cash (cash flexibility (CF)) in the Egyptian context, using a panel data set of 75 Egyptian corporations listed on the EGX100 over the period 2007-2020. Logit regression results indicate that Egyptian firms’ ability to generate cash flows enhances FF, while capital expenditures and tangibility have a negative impact. Moreover, dividend-paying firms prioritize FF. In addition to these key drivers, firm size and profitability influence DF, while CF is affected by firms’ growth opportunities. Understanding how FF operates in Egypt enables financial managers to consider the factors that strengthen it, potentially leading to increased growth and a greater ability to capture profitable investments, ultimately contributing to enhanced firm value.