Comparison between fixed effect and random effect model for stock's market value determination : applied study on insurance companies listed in Tadawul Saudi market

Abstract EN

model for determining the Stock price of the Saudi insurance companies listed at the Tadawul capital market in Saudi Arabia, also the study test the collinearity between the explanatory variables.

The study implemented on 34 insurance companies, over two years from 2017-2018, using cross-sectional regression, and the time series, the companies represented all Saudi insurance industry, and they composed the minor index for the insurance sector.

The study reached to accepted some hypotheses; the other hypotheses were rejected, The results reached that net income and price to the book value have positive also market capitalization have significant relationship on the stock's market value, and number of stocks issued have a negative and statistically significant relationship with stock's market value.

Finally, the paper proved that the fixed effect model is the appropriate model.

Key words: Stocks price, Insurance companies, fixed and random effect models.

JEL Code: C31, C32, G32, L25.