Intangible investment and non-financial performance of Egyptian firms: the moderating role of the COVID-19 pandemic

Abstract

Purpose This study aims to examine the impact of intangible investment on non-financial performance. This study also examines the moderating effect of the COVID-19 pandemic on this relationship. Design/methodology/approach This study extracted data from annual reports for a sample of Egyptian firms from 2012 to 2020. This study used the generalized method of moment for testing research. Findings This study finds that intangible investment positively affects non-financial performance and the COVID-19 pandemic has weakened this positive effect. Research limitations/implications A small sample size is one of the limitations of this study. Furthermore, because of the lack of data in Egypt, the analysis does not include other measures of intangible investment. Finally, the sectoral analysis does not include all sectors because of the lack of observations in some sectors. Practical implications This study offers practical and social implications. It would help policymakers, regulators and shareholders to realize the importance of the intangible investment and also shed light on the consequences of the COVID-19 pandemic. It also offers managerial implications. It motivates managers to invest more in intangible investment as an important resource to increase customer satisfaction and loyalty, enhance the internal operating performance and improve learning and growth, which result in creating sustainable competitive advantage. Originality/value This study provides new empirical evidence on the impact of intangible investment on different dimensions of non-financial performance. To the best of the authors’ knowledge, this paper offers the first empirical evidence on the moderating role of the COVID-19 pandemic in the relationship between intangible investment and non-financial performance.

The Use of Financial Statements’ Information and Other Information in Investors’ Decisions

“…The exclusion of these companies was based on the possibility that their negative net profit during the period from 2021 and 2022 is mainly influenced by Covid-19 consequences on the field. Tourism and Leisure sector in Egypt was one of the highly negatively affected sectors during Covid-19 (Sayed et al, 2022). The short period covered in this study might lead to bias in the results shown from this sector.…”

COVID-19 uncertainty, pandemic management strategy, management control and public health performance

“…This was measured on a 7-point Likert scale (1 = strongly disagree to 7 = strongly agree) by adopting the scale used by Kement et al (2022). Previous studies measured COVID-19 as a dummy variable equal to 1 in 2020 and 0 otherwise (Sayed et al , 2022). However, their study used longitudinal time series data that allowed COVID-19 to be measured as a dichotomous variable compared to the present study, which was cross-sectional.…”

“…Figure 1 shows the theoretical framework, which consists of four constructs: PMS, MCS use, pandemic-induced uncertainty and operational performance. The variable “PMS” is based on conventional theories of organizational structure known as the strategy–structure–performance paradigm (Sayed et al , 2022). Pandemic-induced uncertainty reflects the influence of the external environment on MCS use, which enhances performance if MCS use aligns with the external variable (Otley, 2016).…”

“…This constitutes the continuation of measures to prevent the re-introduction of diseases or viruses. The effectiveness of business strategies, including those strategies based on the design and use of MCS, is supported by the MCS function (Sayed et al , 2022). More precisely, MCS provide all the appropriate and reliable information needed to develop and implement strategies and plans (Hadid and Ai-Sayed, 2021).…”

The Influence of Investment On The Economy In Riau Province Indonesia

“…Because if an investment is still using usury, maysir, gharar will harm economic activity. In addition, some things must be known, such as the influence of investment knowledge, investment motivation, and capital market training on investment decisions with investment interest as a mediation (Sayed et al, 2022).…”