JACIII Vol.21 No.6 pp. 1056-1064
doi: 10.20965/jaciii.2017.p1056


Bounded Rationality, Stock Mispricing, and Corporate Investment

Zhaohui Zhu* and Wensheng Huang**,†

*School of Accounting, Zhejiang Gongshang University
18 Xuezheng Street, Xiasha, Hangzhou, China

**Hangzhou College of Commerce, Zhejiang Gongshang University
149 Jiaogong Road, Hangzhou, China

Corresponding author

December 25, 2016
May 2, 2017
October 20, 2017
corporate investment, bounded rationality, investor sentiment, stock mispricing

Although the effects of agents’ bounded rationality and stock mispricing on corporate investment is becoming a frontier research field in corporate finance, little research has been devoted to different channels of managers catering to agents’ bounded rationality and stock mispricing. With a sample of 2003–2010 Chinese listed companies, we investigate how firms cater to stock mispricing in their investment decision-making. The empirical study results support the view that managers do cater to investors’ perceived bias for investment in intangible assets and/or fixed assets and that firms’ financial constraints, market characteristics, and the myopia of investors are important factors in catering for such investment. Moreover, fixed asset investment may be a more important channel than intangible asset investment for managers when catering to stock mispricing.

Cite this article as:
Z. Zhu and W. Huang, “Bounded Rationality, Stock Mispricing, and Corporate Investment,” J. Adv. Comput. Intell. Intell. Inform., Vol.21 No.6, pp. 1056-1064, 2017.
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