The Stock Market and Corporate Investment: A Test of Catering Theory

• 成果类型: Article
• 署名作者: Polk, Christopher; Sapienza, Paola
• 署名单位: Center for Economic & Policy Research (CEPR); Northwestern University; University of London; London School Economics & Political Science; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn030
• 发表日期: 2009
• 页码: 187
• 关键词: earnings management; valuation; accruals; horizons; returns; bubbles; issues; prices; errors

摘要

We test a catering theory describing how stock market mispricing might influence individual firms' investment decisions. We use discretionary accruals as our proxy for mispricing. We find a positive relation between abnormal investment and discretionary accruals; that abnormal investment is more sensitive to discretionary accruals for firms with higher R&D intensity (opaque firms) or share turnover (firms with shorter shareholder horizons); that firms with high abnormal investment subsequently have low stock returns; and that the larger the relative price premium, the stronger the abnormal return predictability. We show that patterns in abnormal returns are stronger for firms with higher R&D intensity or share turnover.