Financial Decisions and Growth Opportunities: A Spanish Firms Panel Data Analysis

17 Pages Posted: 23 Nov 2000

See all articles by Pablo de Andrés

Pablo de Andrés

Universidad Autonoma de Madrid; ECGI

Félix J. López-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Juan Antonio Rodríguez-Sanz

University of Valladolid - Department of Economics and Business Administration

Abstract

This paper analyzes the influence of financial leverage decisions, dividend payout policies and the ownership structure on the firm market value when companies either face, or do not face, profitable growth opportunities. We use a sample of 101 large non-financial publicly traded Spanish companies. Our results confirm the relevance of debt and dividends in terms of firm value creation by showing a negative relationship between firm value and leverage in the presence of growth opportunities. On the contrary, this relationship turns out to be positive when firms have no profitable investment projects and dividends show an outstanding role in improving value creation. Our results also demonstrate the relevance of ownership structure in the allocation of firm resources.

Keywords: Capital Structure, Dividends, Ownership and Control Structure, Growth Opportunities, Agency Theory

JEL Classification: G31, G32, G35

Suggested Citation

Andrés, Pablo de and Lopez-Iturriaga, Felix Javier and Rodríguez-Sanz, Juan Antonio, Financial Decisions and Growth Opportunities: A Spanish Firms Panel Data Analysis. Applied Financial Economics, No. 15, pp. 391-407, 2005, EFMA 2002 London Meetings, Available at SSRN: https://ssrn.com/abstract=250717 or http://dx.doi.org/10.2139/ssrn.250717

Pablo de Andrés (Contact Author)

Universidad Autonoma de Madrid ( email )

Campus de Cantoblanco
C/ Francisco Tomás y Valiente, 5
Madrid, Madrid 28049
Spain
+34 91 497 6527 (Phone)
+34 91 497 3954 (Fax)

HOME PAGE: http://www.uam.es

ECGI

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Felix Javier Lopez-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Juan Antonio Rodríguez-Sanz

University of Valladolid - Department of Economics and Business Administration ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34-983-423000 Ext. 24395 (Phone)
+34-983-423333 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
915
Abstract Views
4,208
rank
31,101
PlumX Metrics