Investigating the Accruals Anomaly in Egypt" Evidence from An Inefficient Market: An Empirical Study | ||
| المجلة العلمية للدراسات والبحوث المالية والتجارية | ||
| Volume 7, Issue 1, January 2026, Pages 655-687 PDF (771.74 K) | ||
| Document Type: المقالة الأصلية | ||
| DOI: 10.21608/cfdj.2025.412407.2348 | ||
| Authors | ||
| Nehad Hosny Yusuf El-Sayed* 1; Dina Mahmoud Abdallah Taha2 | ||
| 1کلية الإدارة والاقتصاد وتکنولوجيا الاعمال - الجامعة المصرية الروسية | ||
| 2كلية التجارة- جامعة الزقازيق | ||
| Abstract | ||
| This study investigates the presence and persistence of the accruals anomaly in the Egyptian stock market, a frontier market characterized by low liquidity, limited investor sophistication, and informational inefficiencies. Building on Sloan’s (1996) foundational work, the research examines whether firms with high accruals experience systematically lower future valuation compared to those with low accruals—an anomaly that contradicts the Efficient Market Hypothesis (EMH). Using a panel dataset of 100 non-financial firms listed on the EGX from 2014 to 2022, the study employs both portfolio sorting and cross-sectional regression models, utilizing Tobin’s Q as a proxy for future firm value. The empirical findings confirm a statistically significant negative relationship between total accruals and Tobin’s Q, thereby supporting the existence of the accruals anomaly in Egypt. Moreover, the limited explanatory power of the regression model (R² = 0.047) and the significance of accruals in the absence of strong controls indicate that market inefficiency exacerbates the anomaly. These results suggest that investors in the Egyptian market may misprice accruals due to limited information processing capabilities and weak disclosure practices. The study contributes to the global literature by providing rare evidence from a highly inefficient market and offers policy implications related to financial reporting quality, investor education, and regulatory oversight. | ||
| Keywords | ||
| Accruals anomaly; Sloan 1996; Effiecient Market; Egyptian Stock Exchange | ||
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