Abstract

Relative to the recent performance of the Jordanian economy, it can be argued that the private sector must be encouraged to increase investment levels. Indeed, the central idea behind the establishment of the Jordanian capital market in 1978 was to promote savings by activating and encouraging investment in bonds and shares and to direct such savings to serve the development of the national economy.

The fact that firm investment is an important indicator of the health of economies, this study investigates the investment behavior of listed Jordanian industrial firms during the period 2000-2013. Based on the financial statement of 52 listed industrial firms and panel data analysis, the empirical results indicate that firm investment does respond to stock market valuation (Tobin’s Q). On the other hand, firm’s leverage does not have a significant effects on firm investment. Based on these outcomes, one can argue that the pricing efficiency of the listed firms’ stock is extremely important.

 

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