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|Title: ||Financing small firms in Saudi Arabia: a study of informal investors' characteristics and decision-making behaviour|
|Authors: ||Abalkhail, Mohammad A.|
|Keywords: ||Small businesses|
|Issue Date: ||1999|
|Publisher: ||© Mohammad A. Abalkhail|
|Abstract: ||Recently, informal venture capital investors have been recognised as an
important source of financing small & medium sized enterprises(SMEs).
Unfortunately, very little research (if any) has been devoted to understanding
how these investors fund particular investments in developing countries.
This research study conducts the first-ever, detailed investigation in Saudi
Arabia of the informal investor's characteristics, and decision-making
behaviour across the full investment process. A theoretical framework, based
on the asymmetric information that characterises this market, was used.
Five hypotheses were developed to see how informal investors behave to
reduce the inefficiencies and risks associated with the asymmetric
Data from 156 Saudi informal investors were compiled. To analyze the data,
three statistical methods, Factor Analysis, Cluster Analysis and Two-Way
ANOVA, were applied.
A descriptive picture of the profile and the investment activities of informal
investors is presented in Chapter Seven. Research hypotheses related to
investors' decision-making were then tested in Chapter Eight. First, the
study shows that informal investors in Saudi Arabia depend on personal
searches for investment opportunities. This is clearly supports the view that
the flow of information between entrepreneurs and informal investors is
inefficient. Secondly, in order to select a high quality entrepreneur and
venture, investors use specific criteria though clearly the entrepreneur's
reputation is the most important criterion. Third, informal investors use
staging of finance and involvement in the venture to have access to
information and gain better control over the venture. Fourth, informal
investors apply the above methods to reduce the risks of the agency problem.
However, informal investors in Saudi Arabia prefer to monitor the behaviour
of entrepreneurs through outcome-based incentives with moderate use of
involvement and behaviour monitoring.
In concluding the thesis, recommendations and the possible implications of
these findings are discussed. Finally, future research is suggested that may
improve the understanding of informal investors but which is beyond the
scope of this thesis or which depends on its findings.|
|Description: ||A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.|
|Appears in Collections:||PhD Theses (Business)|
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