Determinants of Foreign Investment in Listed Firms at the Amman Stock Exchange

This study investigates the factors that may affect whether foreigners invest in a firm. A panel data set of 2,413 firm-year observations of listed firms at the Amman Stock Exchange was analyzed from 2002 to 2019. The results show that foreigners prefer to invest in large firms that have a dividends policy, a high-quality governance system and external auditing. Local institutional ownership and governmental ownership are found to be insignificantly associated with foreign investment. More interestingly, these results are reported after controlling for possible confounding events that are most likely to affect foreigners’ decisions. Specifically, foreign investment is found to have been negatively affected by the global financial crisis (2007 to 2009). This study contributes to the literature by providing evidence that each capital market has its own features, thus the generalizability of the findings, even between developing countries, is questionable