Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets

Umar Farooq, Mosab I. Tabash (), Basem Hamouri, Linda Nalini Daniel and Samir K. Safi
Additional contact information
Mosab I. Tabash: College of Business, Al Ain University, Al Ain P.O. Box 64141, United Arab Emirates
Basem Hamouri: Department of Finance and Banking Sciences, Amman University College of Financial and Administrative Science, Al-Balqa Applied University, Al-Salt P.O. Box 19117, Jordan
Linda Nalini Daniel: Faculty of Business, Higher Colleges of Technology, Abu Dhabi P.O. Box 41012, United Arab Emirates
Samir K. Safi: College of Business and Economics, United Arab Emirates University, Al Ain P.O. Box 15551, United Arab Emirates

IJFS, 2023, vol. 11, issue 1, 1-15

Abstract: 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.

Keywords: corporate investment; financial development; GCC countries; GMM; macroeconomic factors (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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