The aim of this study is to investigate the influence of internal
factors (i.e. the degree of internationalization, profitability, firm
size, and financial leverage) and external factors (i.e. GNP growth and
the inflation rate) on firms’ growth opportunities or their Investment
Opportunity Set (IOS). The IOS is measured by the market-to-book assets
ratio. The result shows that profitability and firms’ size have a
positive impact on the IOS whereas the degree of internationalization
and financial leverage has a negative influence on the IOS. Finally, the
IOS is positively affected by GNP growth while the inflation rate has a
negative impact on IOS.