| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 88 === Prior literature suggests that contracting theories, tax-based theories, and signaling theories help explaining the cross-sectional relation between growth opportunities and some major corporate policy decisions. The purpose of the study is to provide additional evidence on the relation between growth opportunities and firms’ financing policies, dividend policies, and executive compensation. The current study differs from prior studies in two aspects. First, it distinguishes between long-term and short-term financing policies and between cash dividend and stock dividend policies. Second, it acknowledges that growth opportunities could be endogenous and employs different methodologies.
The study examines all nonfinancial firms that are listed on the Taiwan Stock Exchange from 1996 to 1998. Empirical result shows that firms with more growth opportunities have lower long-term financial leverage, consistent with the contracting hypothesis and tax-based hypothesis. The result of the association between growth opportunities and short-term financial leverage is mixed. The above association is positive (negative) when the leverage is measured relative to the book (market) value of total assets. Firms with more growth opportunities pay less cash dividends, consistent with the contracting hypothesis, and pay more stock dividends, consistent with the contracting hypothesis and the signaling hypothesis. Finally, executive compensation is higher in firms with more growth opportunities, consistent with the contracting hypothesis. Overall, the empirical results are not sensitive to the endogenesis of growth opportunities.
|
|---|
