Financial Factors Determining the Investment Behavior of Lithuanian Business Companies

Abstract

The article aims to identify and evaluate the financial factors influencing the investment behavior of Lithuanian companies. The article briefly reviews and summarizes previous research that provides detailed evidence of the financial factors that influence a firm’s investment behavior. The study is performed using correlation–regression and factor analysis. Sixteen Lithuanian joint-stock companies, the shares of which are listed on the Nasdaq Baltic stock exchange and whose main activity is not related to financial instruments, were selected for the research. Moreover, 58 companies are listed on the Nasdaq Baltic stock exchange (32 companies on the official list, 26 companies on the additional list). There are only 26 Lithuanian joint-stock companies in both lists. Out of 26 Lithuanian companies listed on this stock exchange, 16 were selected whose activities are not related to financial instruments. The results of the study provided strong evidence that a company’s financial assets have a positive impact on capital and overall profitability, i.e., Lithuanian companies with higher profitability invest in financial instruments more often, while companies with borrowed funds and with higher financial restrictions invest less. The study showed that the performance indicators of Lithuanian companies have a weak impact on the size of the company’s financial assets; therefore, it can be assumed that this is related to cognitive factors and heuristics.

Keywords

• financial markets
• investments behavior
• financial decisions
• investments