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Oil market volatility and foreign ownership: the case of Saudi Arabia

Author

Listed:
  • Abdulrahman Alhassan
  • Lakshmi Kalyanaraman
  • Hanan Mohammed Alhussayen

Abstract

Purpose - This study aims to evaluate the resource curse hypothesis in an oil-dependent economy, Saudi Arabia, through examining the impact of oil price volatility on foreign ownership among Saudi listed firms. Design/methodology/approach - The study analyzes a unique data set of firm-level data on foreign ownership for the period 2009–2015. A multivariate regression model was applied to analyze the relationships under study. Findings - The analysis reveals a negative association between oil price volatility and foreign ownership in firms with high leverage and low stock volatility. Research limitations/implications - Policymakers are encouraged to develop policies to control shocks in the supply and demand of oil and enforce economic diversification. Investors can better understand the dynamics of an oil-based economy stock market based on the investment behavior of foreign investors and their response to oil price shocks. Originality/value - This study adds to the literature by analyzing the relationship understudy in an oil-rich and oil-dependent emerging economy, where its critical economic parameters are influenced by oil price volatility and it has the largest and the most liquid stock exchange in the MENA region.

Suggested Citation

  • Abdulrahman Alhassan & Lakshmi Kalyanaraman & Hanan Mohammed Alhussayen, 2024. "Oil market volatility and foreign ownership: the case of Saudi Arabia," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 17(5), pages 991-1013, August.
    • Handle: RePEc:eme:imefmp:imefm-10-2023-0395
    DOI: 10.1108/IMEFM-10-2023-0395
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    More about this item

    Keywords

    Oil price volatility; Foreign ownership; Information asymmetry; Financial constraints; Stock liquidity; G11; G14; G15; Q43;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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