The Impact of Financial Decisions on Valuation of Firms with Excess Cash flow and Firms with Low Investment Opportunities in TSE

The purpose of this paper is to investigate the effect of financial decisions on the market value of firms with excess cashflow and firms with low investment opportunities. Financial decisions can be seen from three aspects, which are investment decisions, dividend policy, and debt policy. The data of 123 publicly traded companies in Tehran Stock Exchange were collected from the years 1383 to 1387. The hypotheses were analyzed, using panel data method and multiple regression models. The results indicated that in the firms with low investment opportunities, investments are understated, while debts are overstated. Moreover, in this kind of firms, shareholders were interested in more cash dividends. Analysis showed the same results for the firms with excess cashflow.