Purpose: This paper aims at investigating financial distress and explore the nature of the relationship between board of director's characteristics and financial distress in the Egyptian economy from 2015-2018.
Design /methodology / approach: To determine the best suitable model to express data, two models were employed in this research. The first model is multivariate discriminant analysis model introduced by Altman and Hotchkiss (2010) and logit model.
Findings: Our results suggest that the proportion of independent directors and CEO duality are found to be significant determinants for financial distress. However, board size is not a significant variable in predicting financial distress. These results have been confirmed using logistic model. On the other hand, discriminant model reveals that all the explanatory variables are significant in explaining financial distress. Increasing board size increases the probability of financial distress while CEO duality and board independence have a positive impact on financial distress probability. Depending on different criteria (R2, classification table, ROC curve) to compare between logit model and discriminant model, it has been revealed that logit model is better in explaining financial distress.
Originality/ value: This article is one of the first to investigate whether board of directors' attributes contribute to explain of the occurrence of financial distress in the context of Egypt's economy.