Firm Life Cycle and Investment Efficiency in the MENA Region: Comparative Study of Oil Exporting and Oil-Importing Countries

This study examines how firm-specific factors influence investment efficiency across different corporate life cycle stages, specifically in the volatile economic context of the MENA region. Using panel data on 332 non-financial firms from 2010-2021, investment efficiency is modeled through Feasible Generalized Least Squares estimations for each life cycle stage. The results indicate that firm-specific factors have varying impacts on investment efficiency in different stages. Sales growth and past returns are positively associated with overinvestment in early stages, while higher leverage links to overinvestment in later stages. Declining firms exhibit underinvestment, suggesting possible financial constraints. The findings highlight the need for nuanced, stage-specific investment strategies, especially given the economic challenges facing the MENA region. The study contributes to investment efficiency literature by providing empirical evidence on life cycle effects for an under-researched market context.