The role of financial flexibility in reducing financial distress: an analytical study of a number of industrial companies contributing to the Iraqi Stock Exchange for the period (2009-2019)

Abstract

The issue of corporate financial failure has received a great deal of attention in financial management, as financial failure is the result of accumulated errors for a period of time preceding bankruptcy. Most cases of financial failure occur in developing countries or whose economies are in a transitional phase, where they face insolvency, low liquidity, and lack of cash flow. Linking cases of financial distress to the high level of leverage of companies that have no future plans to deal with this problem. On the other hand, cases of financial distress occur even in a developed and prosperous economy due to wrong administrative decisions to finance their projects through debt instead of equity. From this standpoint, our study came in an attempt to identify the role of financial flexibility through three indicators, which are (assets, debt capacity, and net cash flow) as an independent variable, in reducing financial distress as a dependent variable. In order to achieve the objectives of the study and answer its questions, the study was tested in the market. Iraq Securities, specifically industrial shareholding companies, as the sample size reached (10) companies, and financial analysis was used to measure the indicators of the study variables using the (EViews-9) program.