Market Mispricing And A Catering Behavior Of Corporate Investment

Traditional financial theory is based on efficient market hypothesis, while theefficient market hypothesis incorporates the rational investor assumption, randomtransaction assumption and effective arbitrageur assumption. Demanding assumptionsmake it cannot explain many abnormal phenomena in the financial market, traditionalfinancial theory has been seriously challenged. In order to get more close to the realityof the capital market, information asymmetry theory first cast doubt on the efficientmarket hypothesis, as it is hard to fully understand transaction object of the market andthe environment. Simultaneously, some economic men may conceal real informationdeliberately, which makes there exists no market of complete information in real life. Inaddition, through extensively absorbing the research achievements of modernpsychology, the behavioral finance theory believes that the investors are not completelyrational, and with only limited rationality. Investors’ irrational behavior will make stockprices deviate from its true value and cause market mispricing, while the corporateinvestment will take the initiative to adjust according to the degree of market mispricing,namely the investment catering behavior.China’s capital market is only more than ten years of development history, themechanism is not very perfect. The individual investor with strong speculative accountfor a large proportion in the market and the irrational degree is high so that thepossibility of market mispricing is higher. In addition, I find that most researches focuson the relationship and single catering channel between the market mispricing andcorporate investment catering behavior by analyzing related literature at home andabroad, moreover, the study on investment theory of behavioral finance in China is stillin its infancy. Therefore, the further research on relationship and multiple functionchannels of them has much important practical significance for enterprise managers,investors and regulatory authority in China.Based on the current situation of China’s capital market, the asymmetricinformation theory and the behavior finance theory, on the basis of deep, this articleselects the A-share listed company data from2010to2012as the research sample, usesdiscretionary accruals as alternative indicator of market mispricing, and join the Q ratio,sales growth, cash flow, asset-liability ratio and enterprise scales variables which have an effect on the level of corporate investment in the model. This paper empiricallyexamines the impact that the market mispricing working on the corporate investmentlevel through the regression equation and the mechanism of investment cateringchannels including equity financing channel, rational catering channel and optimisticmediation channel.The results are as follows:(1) The market mispricing caused by irrational investorsand the corporate investment level are positively related.(2) The equity financingchannel and rational catering channel coexist in the China’ capital market, and theequity financing channel plays a leading role by contrast.(3) Financing constraints willincrease the sensitivity of equity financing channel, that is, with the rise of financialconstraints, the effect of catering by equity financing channel seems to be moreobviously.(4) Market mispricing can shape the corporate managers’ optimism whichhave a significant positive effect on the corporate investment, that is to say, there existsoptimistic mediation channel in China.