Investigating the effect of systemic risk, foreign direct investment and international trade on investment efficiency in companies listed on the Tehran Stock Exchange

Document Type : Original Article

Author

Neyshaboor Islamic Azad University, Iran

Abstract

The purpose of this study is to investigate the effect of systematic risk, direct foreign direct investment and international trade on investment efficiency in companies listed on the Tehran Stock Exchange during the years 2015 to 2018. In this research, because mathematical and numerical symbols are used to understand and explain the subject, the type of research is quantitative. The research is also descriptive-correlational research, because in this type of research, the effect of two or more variables is analysed based on the purpose of the research. The results show that the greater the emphasis on intermediary and consumer industries, and a greater dependence on foreign countries; the systematic risk increases, which in turn would lead to a decrease in investment for the specified industries. Reducing interest rates alone can be an effective factor in increasing the return on investment. As interest rates fall, so do investment costs, which in turn increases investment returns. The increase in the expected inflation rate also affects the investment in financial products, so that with the increase in the expected inflation rate, the expected rate of return on physical assets increases more compared to financial assets (financial products) and alternative physical assets. Financial assets are included in the portfolio. In a growing economy (business development cycle) where the wealth and income of individuals are increasing, the demand for investment in financial products increases, which in turn leads to an increase in the price and return on investment in these products. Recession and declining employment also increase systemic risk and reduce investment.

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