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Investment and the stock market: evidence from Arab firm-level panel data
- Source :
-
Emerging Markets Review . Apr2005, Vol. 6 Issue 1, p85-106. 22p. - Publication Year :
- 2005
-
Abstract
- Abstract: What role do stock returns play in determining investment? In this paper, we investigate the independent effect of stock returns on investment within the context of four hypotheses: passive informant, active informant, financing, and stock market pressure. Using a sample of 83 firms from five Arab countries during 1996–2001, we find that the passive informant hypothesis holds true, with only sales and debt growth as significant determinants of capital expenditures. Surprisingly, cash flow has no effect on investment, which could mostly be due to the dividend policy of Arab firms. The fact that Arab stock markets do not allocate capital expenditures unwarranted by fundamentals gives support to current efforts at strengthening Arab stock markets. [Copyright &y& Elsevier]
- Subjects :
- *STOCK exchanges
*RATE of return
*CAPITAL investments
*BUSINESS enterprises
Subjects
Details
- Language :
- English
- ISSN :
- 15660141
- Volume :
- 6
- Issue :
- 1
- Database :
- Academic Search Index
- Journal :
- Emerging Markets Review
- Publication Type :
- Academic Journal
- Accession number :
- 17639015
- Full Text :
- https://doi.org/10.1016/j.ememar.2004.09.005