Information asymmetry and investor valuation of Egyptian firms: do corporate leverage and profitability matter?
Document Type
Article
Source of Publication
International Journal of Accounting and Information Management
Publication Date
9-28-2026
Abstract
Purpose – This study aims to investigate the extent to which information asymmetry affects corporate investor valuation, drawing on the pecking order, agency and signaling theories. Similarly, it examines how corporate leverage and profitability levels affect the relationship between information asymmetry and corporate value. Design/methodology/approach – The study’s sample consists of Egyptian firms listed on the Egyptian exchange (EGX) 100 index from 2015 to 2022. A wide (narrow) bid-ask spread indicates high (low) information asymmetry. The corporate value of Egyptian firms is measured using Tobin’s Q ratio. This study also used the market-to-book ratio to assess the firm’s value. Findings – The results reveal that Egyptian listed firms with high levels of information asymmetry, particularly those with wide bid-ask spreads, tend to experience a diminished market value. However, both financial leverage and firm profitability mitigate the inverse impact of information asymmetry on corporate value, highlighting their moderating roles in this nexus. Practical implications – Egyptian firms should enhance transparency and reporting to improve investor confidence and market valuation. Firms with high information asymmetry can use leverage and profitability metrics strategically to signal stability and mitigate negative impacts on value. Likewise, policymakers should enforce stronger disclosure standards to foster market efficiency in Egypt. Originality/value – Our study examines the relationships among corporate value, information asymmetry and the moderating effects of firm leverage and firm profitability. To the best of the authors’ knowledge, this is the first empirical study to investigate this nexus in Egypt, thereby extending the literature to a developing economy characterized by high information asymmetry.
DOI Link
ISSN
Publisher
Emerald
First Page
1
Last Page
26
Disciplines
Business
Keywords
Corporate value, Egypt, Financial leverage, Firm profitability, Information asymmetry
Scopus ID
Recommended Citation
Alm-El-Din, Mai; Eliwa, Yasser; and Hassanein, Ahmed, "Information asymmetry and investor valuation of Egyptian firms: do corporate leverage and profitability matter?" (2026). All Works. 8437.
https://zuscholars.zu.ac.ae/works/8437
Indexed in Scopus
yes
Open Access
no