Capital expenditure and firm value in the MENA region: the role of market competition and information asymmetry

ABSTRACT

This paper examines the relationship between capital expenditure and firm value in the MENA region, and the moderating role that market competition and information asymmetry play in this relationship. The study consists of 3,930 observations that include yearly data from the 2010–2019 period. Empirical tests show that in markets of high product competition, capital expenditure exerts a negative effect on firm value, while under the condition of high information asymmetry, this effect is positive. The results also suggest that the hypothesized relationships are stronger for small-sized firms and for Shariah-non-compliant companies.

KEYWORDS:

• Capital expenditure
• firm value
• market competition
• information asymmetry
• Shariah compliance
• MENA

JEL:

• G3
• G34
• G4

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Harit Satt

Dr. Harit Satt Associate professor of finance and Economics, School of Business Administration Al Akhawayn University in Ifrane, Morocco

Youssef Chetioui

Dr. Chetioui Youssef Assistant proferssor of marketing, School of Business Administration Al Akhawayn University in Ifrane, Morocco

Omar Ouahidi

Mr. Omar Ouahidi Master in business administration, School of Business Administration Al Akhawayn University in Ifrane, Morocco Professor

Virginia Bodolica

Virginia Bodolica Head of Management Department, The Said T. Khoury Chair of Leadership Studies, and Professor of Management American University of Sharjah, UAE

Diae Lamiri

Diae Lamiri Master in business administration, School of Business Administration Al Akhawayn University in Ifrane, Morocco