A Statistical Analysis of Liquidity’s Moderating Role in the Relationship Between Tax Aggressiveness, Debt Financing, and Egyptian Non-Financial Firm Performance

Abstract

This study examines how debt financing and tax aggressiveness affect firm performance, measured by ROA and ROE. Using OLS regression on data from 41 non-financial EGX 100 firms (2017–2023), results show that firms with high debt financing perform better. However, tax aggressiveness and liquidity have no significant impact on ROA. Similarly, neither tax aggressiveness nor debt financing significantly affect ROE, and no link was found between ROE and liquidity. Liquidity, as a moderating variable, showed no influence on the relationship between firm performance and the independent variables. The study concludes that firm performance is directly linked to debt financing, not tax aggressiveness, and recommends firms rely more on equity to enhance profitability, as aggressive tax strategies do not necessarily increase profits.