Investment Decision and Dividend Policy as Determinants of Financing Decision : A New Empirical Evidence

This study investigates empirically effect of investment decision and dividend policy on financing decision. This research uses two proxies that represent investment decision those are actual investment and investment opportunity. The effects of size effect and profitability are controlled in this study. Regression analysis with Newey-West HAC Standard Errors & Covariance is used in this study to eliminate the bias effect of heteroscedasticity and autocorrelation. Research results show that investment opportunity consistently has significant effect on financing decision as predicted. Dividend policy also has significant effect financing decision; however the effects have no particular pattern