Factors Affecting Investment Decision in the Saudi Stock Market

Abstract

This research aims to explore the factors influencing the decision of investment in the Saudi Arabian stock market which are the following factors: the analysis and financial ratios, the history and reputation of the company, dividends, date of the company’s founding, company size, recommendations and opinions of analysts, the nature of the company's activity) and its impact on investment decision. A questionnaire has been used as a research tool, the study group consisted of all individuals investing in the Saudi stock market in 2018, and the sample was selected in an available way which is one type of non-random sample, with a total of 128 valid questionnaires for analysis out of 130 questionnaires. The research on its theoretical side touched on the efficiency and importance of the market, the types of financial markets, the formation and evolution of the Saudi stock market, the period of collapse of the Saudi stock market, the post-collapse Saudi stock market. While the tests of reliability and stability (Cronbach's alpha coefficient), frequencies, percentages, arithmetic averages and standard deviation, (T- test) for differences between two independent samples (independent sample T-test), one-way analysis of variance (one-way ANOVA) were used in the practical aspect of the research. The research has found an effect of the following factors: analysis and financial ratios, the history and reputation of the company, dividends, date of the company’s founding, company size, recommendations and opinions of analysts, the nature of the company's activity) on investment decision.

The most influential factor on investment decision is the analysis and financial ratios, followed by the reputation and history of the company, dividends and its impact on investment decision ranked third, while date of the company’s founding ranked fourth in terms of influencing investment decision, while the nature of the company's activity ranked fifth in terms of impact, followed by company size in the sixth rank, and finally recommendations and opinions of analysts ranked seventh and last in terms of influencing the decision of investment in the Saudi stock market.