Capital Structure as a Mediating Mechanism Between Managerial Ability and SME Performance: Evidence from Egypt | ||
| Journal of Modern Business and Technology | ||
| Articles in Press, Accepted Manuscript, Available Online from 25 November 2025 PDF (635.42 K) | ||
| Document Type: Research Article | ||
| DOI: 10.21608/jmbt.2025.439235.1006 | ||
| Authors | ||
| Yasmine M. Ragab1; Salwa Mounir Elkady2; Mohamed A. Saleh* 1 | ||
| 1Accounting and Finance Department, Faculty of Management and Business Intelligence, MTI University, Cairo, Egypt. | ||
| 2Business & Marketing Department, Faculty of Management and Business Intelligence, MTI University, Cairo, Egypt. | ||
| Abstract | ||
| Purpose- This study examines how capital structure mediates the relationship between managerial ability (MA) and the performance of Egyptian SMEs. Design/methodology/approach- Using 198 firm-year observations from 22 SMEs listed on the Nile Stock Exchange (2014-2022), managerial ability is measured via Data Envelopment Analysis (DEA) following Demerjian et al. (2012). Capital structure (CS) is proxied by the book leverage ratio. A three-step regression and bootstrapped mediation approach assess the mediating effect of capital structure between MA and SME performance (ROA). Findings- Results show that MA significantly enhances SME performance. MA is negatively associated with leverage, while leverage positively affects performance. Capital structure partially mediates the MA-performance relationship, supporting the Trade-Off and Upper Echelons theories Practical Implications- SMEs led by highly capable managers achieve better performance through efficient financing decisions. Boards and investors should prioritize managerial competence when hiring or evaluating executives. Originality/value- This study provides the first empirical evidence from Egypt on how capital structure channels the effect of managerial ability on SME outcomes, integrating multiple theoretical lenses into a unified mediation framework. | ||
| Keywords | ||
| Management competence; Return on assets; Leverage; trade-off theory | ||
|
Statistics Article View: 28 PDF Download: 6 |
||
