Corruption perception, institutional quality and performance of Egyptian-Listed companies: evidence from econometric models

Abstract

Purpose This study aims to examine the impact of corruption perception and institutional quality on the performance of publicly listed companies in Egypt. Design/methodology/approach Data from 42 publicly traded Egyptian firms during 2013–2022 were analyzed. Corruption was measured using the Transparency International Corruption Perceptions Index, while institutional quality was assessed through a composite measure derived from World Bank Governance Indicators using principal component analysis. The study used a generalized method of moments dynamic panel model for the analysis. Findings The results reveal a negative relationship between corruption and firm performance, both in market value (Tobin’s Q) and accounting outcomes (ROA). Institutional quality also inversely affects performance, indicating that corruption and weak governance undermine corporate success in Egypt. Research limitations/implications The findings are specific to the 2013–2022 period and exclude newly listed firms due to data limitations. Future studies could expand the sample and timeframe to provide broader insights. Practical implications The study underscores the need for stronger governance and institutional reforms. Policymakers and regulators must address corruption and improve institutional frameworks to enhance firm performance and market confidence. Originality/value This study challenges the positivist view of corruption, presenting evidence of its detrimental effects in the Egyptian context. It contributes to the limited research on how corruption perception and institutional quality affect firm performance in Egypt.