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This paper tests whether stock prices reflect investor's expectations regarding the value of real options. The analysis is implemented based on a sample of 391 high-tech companies listed on main OECD stock markets during the period December 1994 through December 2000. Results confirm the predicted relation between the fraction of a firm's market value not accounted for by its assets-in-place, and a series of variables that are assumed to disclose its real options value, variables such as research and development activity, risk and skewness of stock returns, and size. The results are robust even after controlling for valuation date, sub-industry, country, and alternative measures of risk.

We test hypotheses about the structure of corporate debt ownership and the use of bank debt by firms in a civil-law country, Spain. We focus on bank debt effects in the presence of information asymmetries and agency costs, and on efficient versus inefficient firm liquidation. We find that the relation between growth opportunities and bank financing is not as strong as the one found in common-law countries, that there is a positive relation between firm size and the proportion of bank debt used, and that firms closer to bankruptcy and highly leveraged are more likely to use bank debt.

This paper analyses 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. A sample of 101 large non-financial publicly-traded Spanish companies is used. The results confirm the relevance of debt and dividends in terms of firm value creation by showing a negative relationship between firm value and both leverage and dividend payments in the presence of growth opportunities. On the contrary, this relationship turns out to be positive when firms have no profitable investment projects. The results also demonstrate the relevance of ownership structure in the allocation of firm resources.

A board of directors is one of the most important corporate governance instruments available to banks. Another is the design of compensation packages for managers and directors to align their goals with those of other bank stakeholders: owners, creditors, depositors, taxpayers and regulators. Stakeholders can complement monitoring with incentive pay schemes by making the manager a residual claimant to the additional value obtained by his/her actions. However, compensation models for banks do not only have to align managerial and shareholder incentives, but must also avoid excessive risk-taking that may result in systemic risk (Bolton et al., 2010; Gordon, 2010).

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.