TY - JOUR
T1 - Nexus between Macroeconomic Factors and Corporate Investment
T2 - Empirical Evidence from GCC Markets
AU - Farooq, Umar
AU - Tabash, Mosab I.
AU - Hamouri, Basem
AU - Daniel, Linda Nalini
AU - Safi, Samir K.
N1 - Publisher Copyright:
© 2023 by the authors.
PY - 2023/3
Y1 - 2023/3
N2 - The current study aims to explore the role of various macroeconomic factors in determining corporate investment. Using firm-level data of six Gulf Cooperation Council (GCC) region countries for a 14 year period (2007–2020), the current study establishes the empirical analysis by employing the system generalized method of moments (GMM) technique. The empirical results reveal the negative impact of foreign direct investment whilst the positive impact of economic growth, financial development, and inflation rate on corporate investment decisions. Due to high market competition, foreign direct investment can hamper the growth of domestic industrial sectors. However, economic growth, financial development, and inflation rate positively drive the investment by enhancing the demand for industrial products, cheap financing, and price appreciation effect on production enrichment respectively. Based on results, it is suggested that corporate managers should consider the economic sensitivity of investment. The novelty of study can be listed, as the current analysis presents the dynamic role of various economic factors in determining the corporate investment decisions specifically in GCC region countries.
AB - The current study aims to explore the role of various macroeconomic factors in determining corporate investment. Using firm-level data of six Gulf Cooperation Council (GCC) region countries for a 14 year period (2007–2020), the current study establishes the empirical analysis by employing the system generalized method of moments (GMM) technique. The empirical results reveal the negative impact of foreign direct investment whilst the positive impact of economic growth, financial development, and inflation rate on corporate investment decisions. Due to high market competition, foreign direct investment can hamper the growth of domestic industrial sectors. However, economic growth, financial development, and inflation rate positively drive the investment by enhancing the demand for industrial products, cheap financing, and price appreciation effect on production enrichment respectively. Based on results, it is suggested that corporate managers should consider the economic sensitivity of investment. The novelty of study can be listed, as the current analysis presents the dynamic role of various economic factors in determining the corporate investment decisions specifically in GCC region countries.
KW - corporate investment
KW - financial development
KW - GCC countries
KW - GMM
KW - macroeconomic factors
UR - http://www.scopus.com/inward/record.url?scp=85151096682&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85151096682&partnerID=8YFLogxK
U2 - 10.3390/ijfs11010035
DO - 10.3390/ijfs11010035
M3 - Article
AN - SCOPUS:85151096682
SN - 2227-7072
VL - 11
JO - International Journal of Financial Studies
JF - International Journal of Financial Studies
IS - 1
M1 - 35
ER -
