Financial Decisions and Growth Opportunities: A Spanish Firms Panel Data Analysis
17 Pages Posted: 23 Nov 2000
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: Suggested Citation