The moderating effect of audit quality and COVID-19 on the dividend payout-firm performance relationship: Egypt evidence

Figures & data

Table 1. The sample structure.

N	Industry sector	No. of firms	No. of observations	%
1	Food and beverages	12	84	18.5
2	Constructions and building materials	9	63	14
3	Industrial and Car products and services	6	42	9.5
4	Tourism and entertainment	7	49	10.5
5	Housing and real estate	8	56	12.4
6	Chemicals	4	28	6.2
7	Basic Resources	5	35	7.5
8	Textiles and durable goods	4	28	6.2
9	IT & Communication Services	3	21	4.5
10	Trade & Distributors	4	28	6.2
11	Healthcare	3	21	4.5
	Total	65	455	100%

Table 2. Variables calculation and expected signs.

Variables	Types of variables	Variable Code	Calculating method	Expected signs
Firm performance	Dependent	Tobin’s Q	(Total market value of equity + net debts) / Total book value of assets.	–
		ROA	Net income divided by total assets
Dividend Payout Ratio	Independent	DIV	Total dividend payments / Total outstanding assets	(+)
Audit quality	Moderator	AQBIG4	It is a nominal variable that a company audited by the Big Four audit firms would take the value of 1 and 0 otherwise.	(+)
		AQSPEC	The measurement of whether a company is audited by an industry-specialist audit firm is represented as a binary variable. It takes on a value of one if the auditing firm has a market share equal to or greater than 10% in the client sector, and zero if not.
COVID	Moderator	COVID 19	It is a nominal variable that takes the value of 1 during the years 2020 and 2021 and 0 otherwise.	(−)
Leverage	Controlled	LEV	% of total liabilities to total assets	(−)
Firm Size	Controlled	SIZE	The natural logarithm of total assets	(+)

Table 4. Correlation matrix and VIF results.

Variables	Tobin’s Q	DIV	SIZE	LEV	AQBIG4	AQSPEC	COVID-19	VIF	1/VIF
Tobin’s Q	1							–	–
DIV	0.370***	1						1.23	0.815
SIZE	0.103**	0.280***	1					1.40	0.714
LEV	−0.153***	−0.230***	−0.079*	1				1.12	0.891
AQBIG4	0.123***	0.034	0.455***	−0.107**	1			2.92	0.342
AQSPEC	0.359***	0.070	0.320***	−0.049	0.771***	1		2.52	0.396
COVID	−0.082*	−0.046	0.039	0.032	−0.019	−0.001	1	1.01	0.991
Mean VIF								1.70

Notes: ***, **, and *denote Correlation is significant at the 1, 5, and 10 percent levels. ROA, the firm performance; DIV, the dividend payout ratio; LEV, leverage; SIZE, firm size; AQBIG4, the big four audit firms; AQSPEC, the specialisation of audit firms; COVID, COVID-19 pandemic.

Table 3. Descriptive statistics.

Variables	n	Minimum	Maximum	Mean	Median	Std. Deviation
Tobin’s Q	455	0.41	2.90	1.17	0.99	0.62
DIV	455	0.00	0.11	0.03	0.00	0.04
SIZE	455	18.25	23.47	20.75	20.82	1.44
LEV	455	0.04	0.83	0.43	0.44	0.21
AQBIG4	455	0.00	1.00	0.46	0.00	0.47
AQSPEC	455	0.00	1.00	0.33	0.00	0.50
COVID	455	0.00	1.00	0.286	0.00	0.45

Notes: Tobin’s Q, the firm market performance; DIV, the dividend payout ratio; LEV, leverage; SIZE, firm size; AQBIG4, the audit quality; AQSPEC, the specialization of audit firms; COVID, COVID-19 pandemic.

Table 5. Findings of Pooled (OLS) and FE regression analysis.

Dependent variable: Tobin’s Q
	Model 1		Model 2. A		Model 2. B		Model 3
	Pooled (OLS)	FE	Pooled (OLS)	FE	Pooled (OLS)	FE	Pooled (OLS)	FE
Predictor	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)
DIV	4.806 (5.54***)	4.088 (4.07***)	5.537 (4.11***)	3.412 (2.61**)	5.067 (4.67***)	4.025 (3.53***)	5.512 (4.79***)	4.825 (4.16***)
AQBIG4	–	–	0.498 (3.06***)	0.808 (4.01***)	–	–	–	–
DIV* AQBIG4	–	–	0.734 (0.37)	2.291 (1.36)	–	–	–	–
AQSPEC	–	–	–	–	0.711 (5.41***)	0.778 (5.64***)	–	–
DIV* AQSPEC	–	–	–	–	2.080 (1.05)	1.930 (0.93)	–	–
COVID	–	–	–	–	–	–	−0.013 (−0.16)	−0.018 (−0.23)
DIV* COVID	–	–	–	–	–	–	−2.859 (−1.69*)	−3.561 (−2.10**)
SIZE	0.015 (0.44)	0.174 (1.47)	0.050 (1.17)	0.164 (1.63)	0.046 (1.40)	0.109 (1.08)	0.026 (0.77)	0.267 (2.50**)
LEV	−0.493 (−2.37**)	−1.022 (−3.07**)	−0.336 (−1.56)	−0.595 (−1.78*)	−0.427 (−2.25**)	−0.798 (−2.60**)	−0.515 (−2.36**)	−1.101 (−3.23***)
Constant	0.947 (1.39)	−2.11 (−0.88)	1.998 (2.47**)	−2.465 (−1.21)	1.966 (2.97***)	−1.103 (−0.54)	0.736 (1.07)	−3.999 (−1.86*)
Year FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
industry FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
R^2	0.125	0.072	0.114	0.054	0.239	0.172	0.129	0.059
F-value	41.47***	10.67***	62.23***	18.66***	115.18***	23.97***	44.42***	9.87***
Obs.	455	455	455	455	455	455	455	455

Notes: ***, **, and *denote statistical significance at the 1, 5, and 10 percent levels.

Table 6. Alternate measurement of the dependent variable.

Dependent variable: ROA
	Model 4		Model 5. A		Model 5. B		Model 6
	Pooled (OLS)	FE	Pooled (OLS)	FE	Pooled (OLS)	FE	Pooled (OLS)	FE
Predictor	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)
DIV	1.036 (6.03***)	0.727 (2.94***)	1.168 (5.05***)	0.726 (2.07**)	1.068 (5.41***)	0.715 (2.68***)	0.994 (5.43***)	0.725 (3.18***)
AQBIG4	–	–	0.024 (1.80*)	0.041 (2.80***)	–	–	–	–
DIV* AQBIG4	–	–	0.269 (0.85)	0.047 (0.10)	–	–	–	–
AQSPEC	–	–	–	–	0.029 (2.52**)	0.031 (2.17**)	–	–
DIV* AQSPEC	–	–	–	–	0.139 (0.50)	0.053 (0.15)	–	–
COVID	–	–	–	–	–	–	−0.026 (−0.53)	−0.027 (−1.43)
DIV* COVID	–	–	–	–	–	–	−0.114 (−3.05***)	−0.296 (−3.35***)
SIZE	0.009 (2.11**)	0.048 (2.75***)	0.006 (1.31)	0.048 (2.77***)	0.006 (1.58)	0.046 (2.75***)	0.011 (2.68***)	0.071 (4.91***)
LEV	−0.102 (−3.11***)	−0.217 (−4.23***)	−0.097 (−3.04***)	−0.196 (−3.85***)	−0.098 (−3.07***)	−0.208 (−3.97***)	−0.103 (−3.18***)	−0.227 (−5.03***)
Constant	−0.125 (−1.51)	−0.896 (−2.47**)	−0.079 (−0.89)	−0.918 (−2.56**)	−0.082 (−1.05)	−0.854 (−2.49**)	−0.167 (−1.99**)	−1.334 (−4.45***)
Year FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
industry FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
R^2	0.335	0.186	0.338	0.169	0.346	0.191	0.346	0.164
F-value	65.05***	8.37***	62.20***	5.85***	64.33***	5.44***	72.31***	18.82***
Obs.	455	455	455	455	455	455	455	455

Notes: ***, **, and *denote statistical significance at the 1, 5, and 10 percent levels.

Table 7. Results of regression analysis using a two-step system GMM approach.

Dependent variable: Tobin’s Q
	Model 1	Model 2. A	Model 2. B	Model 3
Predictor	Coef. (t)	Coef. (t)	Coef. (t)	Coef. (t)
Tobin’s Qit-1	0.380(5.32***)	0.391(4.34***)	0.358(3.83***)	0.443(3.55***)
DIV	4.434(1.93*)	0.420(2.35**)	2.192(2.73**)	2.873(2.42**)
AQBIG4	–	0.678(2.24**)	–	–
DIV* AQBIG4	–	18.061(0.15)	–	–
AQSPEC	–	–	0.371(2.85**)	–
DIV* AQSPEC	–	–	9.802(1.24)	–
COVID	–	–	–	−0.021(−0.11)
DIV* COVID	–	–	–	−3.249(−2.48**)
SIZE	0.013(0.58)	0.063(1.32)	0.044(0.96)	0.008(0.26)
LEV	−0.848(−2.81***)	−1.070(−2.77***)	−0.869(−1.82*)	−1.021(−3.47***)
Constant	−0.054(−0.11)	−1.004(−1.04)	−0.583(−0.58)	−0.065(−0.13)
Year FE	Yes	Yes	Yes	Yes
industry FE	Yes	Yes	Yes	Yes
F-value	2296.10***	1286.85***	1264.12***	2796.17***
Obs.	455	455	455	455
AR1(p-value)	0.001	0.002	0.001	0.000
AR2(p-value)	0.400	0.734	0.676	0.794
Sargan test(p-value)	0.199	0.397	0.225	0.201
Hansen test(p-value)	0.223	0.535	0.326	0.221

Notes: ***, **, and *denote statistical significance at the 1, 5, and 10 percent levels.

Data availability statement

Empirical data is available upon request.