Does the efficiency of corporate governance and intellectual capital affect a firm's financial distress? Evidence from Egypt

Purpose Using data on 51 firms traded in the Egyptian Exchange from 2014 to 2016, this paper aimed to assess the efficiency of corporate governance (CG) and intellectual capital (IC) practices and to explore their influence on the probability of a firm's financial distress. Design/methodology/approach The relative efficiency of CG and IC practices has been measured under the Malmquist data envelopment analysis model. A modified Z-score model was applied to assess firms' financial distress. Findings The Wilcoxon signed-rank test revealed almost insignificant evidence regarding the improvement of CG and IC efficiency over the study period. The efficiency score of CG practices had no impact on the likelihood of financial distress. However, the efficiency score of IC negatively affected the probability of financial distress. Originality/value This study, using Malmquist data envelopment analysis, is among the first attempts to assess the relative efficiency of CG and IC practices and their effects on financial distress.