Using data for 53,365 firms from 40 countries over the period of 1991-2012, we find that there is a country-specific component in corporate growth opportunities and this is much more pronounced in small companies than in large firms. We also find that the country-dependence of corporate growth options -- especially the one for small firms -- decreases as the country becomes more open financially. Interestingly, the exact opposite pattern exists in industry-specific growth opportunities, as they increase with the country’s financial openness, especially for small firms. With the development of financial globalization, small firms are also found to invest more in line with industry-specific growth options and less with country-specific ones, compared to large companies. Overall, the results indicate that financial globalization helps corporate growth opportunities -- and thus investments -- to be determined globally rather than locally and reduces firm heterogeneity in the country.
Keywords: Country; Growth opportunities; Heterogeneity; Financial globalization; Firm size
JEL classification: F30; F65; G30
