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The Determinants of Investment Behavior of Saudi Industrial Firms

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  • Soumaya Bechir Hechmi

    (Meehan School of Business, Stonehill College, North Easton, MA, USA.)

Abstract

In this paper, we examine simultaneous relationship between respectively cash flow, dividend yield, debt, firm size and the investment. This research used 51 listed Saudi industrial firms, from 2009-2018. First of all, we have noticed that the CF has a statistically significant and positive effect on investment. Second, the dividend yield rate is negatively correlated with the investment. Third, debt and the firm size have a positive and significant effect on the relationship between investment and cash flow. This finding is not a sign of presence of financial constraints but it means that firms of our sample substitute the distribution of dividends by debts.

Suggested Citation

  • Soumaya Bechir Hechmi, 2020. "The Determinants of Investment Behavior of Saudi Industrial Firms," International Journal of Economics and Financial Issues, Econjournals, vol. 10(2), pages 203-208.
    • Handle: RePEc:eco:journ1:2020-02-22
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    investment behavior ; investment-cash flow sensitivity; dividend distribution; debt; firm size and financial constraints.;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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