The Research On Corporate Financing-Investing Decision Under Investors' Irrational Valuations

The market efficiency is always one point at issue in the fields of finance and investment theories and application, and it is also an important characteristic hypothesis to distinguish behavioral finance and standard finance. Under different hypothesis, there may be many differences in the theoretic behaviors of corporate investment and finance. In different markets, the application of these theories may be quite different. China is in the development process of socialistic market economy and capital market, and the financial environment, the equity structures and the actual pecking-order are quite different from other developed countries. Some particular phenomena exist in China corporate investing-financing decisions, and therefore, there may be some practical obstacles in the perfect applications of some standard financial theories in China corporate finance preference, investment decision and the capital structure optimization. As a result, it is more necessary to make the market hypothesis closer to practice. Under the market inefficiency hypothesis, this paper focuses on the investors'irrational valuations on corporate stocks, and deeply discusses the interactions among corporate finance, investment and market performance. It follows the international forward subjects, and has some important practical and theoretic significance.This paper consists of eight parts. Firstly, it reviews the classical theories of investment, finance and capital structure, and then points out the questions on the base of the analysis of actual environment and reasons of our research, and provides the research route and content. Secondly, it reviews the investing-financing decision theory in standard finance fields, asymmetric information theories and signal models, and then compares them with the market timing theory in behavioral finance fields, which forms the theoretical basement of this paper. Thirdly, it measures market investors'irrational valuations with market-to-book ratios and then discusses the short-term impacts of stock valuations on the financing implement selection. Fourthly, on the base of the analysis of short-term financing decision, this paper discusses the long-term effects of historical market timing on capital structure and cumulative changes in leverage. Fifthly, it discusses that in the dual issues whether the market timing is more important than the target capital structure or not, which can make supplement for the relationship between capital structure and market timing. Sixthly, it emphasizes on the aftereffects of China corporate season equity issues, compares the announcement effects and long-term market performances of SEI in bull market and bear market, and surveys the reasons and the mechanism of China corporate SEI. Chapter 7 and Chapter 8 survey the effects of irrational valuations on corporate investments. The former assumes that managers have long-horizon, and it...