ADDITIONAL EVIDENCE ON THE ASSOCIATION BETWEEN THE INVESTMENT OPPORTUNITY SET AND CORPORATE FINANCING, DIVIDEND, AND COMPENSATION POLICIES

This paper presents additional evidence on the relation between the in vestment opportunity set and financing, dividend, and compensation pol icies. Our results are based on a sample of 237 growth firms and 237 n ongrowth firms. We find that growth firms have significantly lower deb t/equity ratios and exhibit significantly lower dividend yields than n ongrowth firms. We also find that growth firms pay significantly highe r levels of cash compensation to their executives and have a significa ntly higher incidence of stock option plans than nongrowth firms. Howe ver, controlling for firm size, the incidence of bonus plans, performa nce plans, and restricted stock plans does not differ between growth a nd nongrowth samples.