A Study on Factors Affecting Companies Long-Term Investments within the GCC Markets

Abstract

This study aims to explore the determinants of companies' long-term investments within the context of Gulf Cooperation Council markets. The importance of this study arises from the fact that earlier researchers who investigated this subject had mostly concentrated on developed markets and evidence from developing markets is largely absent. Besides, the existing studies had focused on factors influencing companies' long-term investment at the company level, and evidence related to the impact of macroeconomic factors on such investments is scarce. A Panel Ordinary Least Squares regression is utilized to analyze the data of 435 companies from the year 2000 to 2014. This period is chosen due to the steady economic conditions of the investigated markets as they enjoyed a less volatile macroeconomic environment compared to post-2014, where the fall of oil prices severely affected these markets' growth. The analysis revealed contradicting findings compared to the existing literature regarding both macroeconomic factors and companies related factors that influences long-term investments. For instance, government spendings, oil prices, and trade levels are all significant factors in the Gulf Cooperation Council companies' long-term investments which is not the case in other emerging markets. Also, the industrial companies within these markets are not severely influenced by these factors compared to the services companies. Hence, the current study extends the existing literature on two dimensions by providing new insight into this subject from new markets and reveals new findings regarding the impact of macroeconomic factors on companies' long-term investments.