Corporate financial resilience and stock price crash risk: Does auditor report delay matter?

Abstract

This study examines whether and how corporate financial resilience capacity, including financial flexibility, is associated with stock price crash risk. Likewise, it assesses whether and how auditor report delay moderates this association in an emerging market. Using 848 firm-year observations of non-financial firms listed in the Egyptian stock market from 2017 to 2024, we conduct ordinary least squares (OLS) and panel corrected standard error (PCSE) analyses to test our hypotheses and ensure the robustness of the results. Our results indicate that higher financial resilience capacity is significantly associated with lower stock price crash risk. However, with auditor report delay, the initially negative impact of financial resilience on crash risk becomes positive, signaling that such a delay acts as a negative indicator of financial performance. This study extends literature by examining the relationships between corporate financial resilience capacity, stock price crash risk and audit report delay in a developing market, such as Egypt.