Investment and Firm Value: An Analysis Using Panel Data

33 Pages Posted: 23 Jul 2001

See all articles by Esther del Brío

Esther del Brío

University of Salamanca

Alberto de Miguel

University of Salamanca - Administration and Business Economics

Julio Pindado

University of Salamanca - Administration and Business Economics

Abstract

In this paper we develop a methodology complementing event studies in order to analyse the relationship between investment and firm value. The results of our model using panel data show a relationship between the two variables that is direct but inversely proportional. In addition, the empirical evidence shows that the creation of value persists over the long run, although no distinction is found between firms that announce their investments (divestments) and those that do not. Finally, we analyse value creation in relation to investment opportunities and free cash flow, providing in both cases additional evidence.

Keywords: Firm investment, Value creation, Panel data

JEL Classification: G31

Suggested Citation

del Brío González, Esther and de Miguel Hidaldo, Alberto and Pindado, Julio, Investment and Firm Value: An Analysis Using Panel Data. Available at SSRN: https://ssrn.com/abstract=275073 or http://dx.doi.org/10.2139/ssrn.275073

Esther Del Brío González

University of Salamanca ( email )

Campus Miguel de Unamuno
37008 Salamanca, Salamanca 23007
Spain
34-923-294640 (Phone)
34-923-294715 (Fax)

Alberto De Miguel Hidaldo

University of Salamanca - Administration and Business Economics ( email )

Campus Miguel de Unamuno
Salamanca, ES-37007
Spain
+34 923 294640 (Phone)
+34 923 294715 (Fax)

Julio Pindado (Contact Author)

University of Salamanca - Administration and Business Economics ( email )

Campus Miguel de Unamuno
Salamanca, ES-37007
Spain
+34 923 294640 (Phone)
+34 923 294715 (Fax)