Study On The Impact Of Stock Mispricing And Information Transparency On Investment Efficiency

Investment decisions determine the accumulated value of enterprises andinvestment efficiency is the criterion to judge the effect of the accumulation. In anefficient capital market, high-efficiency investments can bring sufficient cash flow,and achieve value added and the sustainable development goals. Therefore, theefficiency of investment has been one of the most important researches of thecorporate. With the global economic recovery, the importance of financial markets hasbeen once again highlighted and academics and practitioners will pay a lot of attentionto the study of the stock market. In the weak-form efficient stock market, the stockprice does not correctly reflect the fundamental value of corporate, and is prone tooverestimate or underestimate the share price, leading capital flows to the inefficientfield. Meanwhile, information transparency also has some influence on the optimalallocation of capital. Improving information transparency can reduce the informationasymmetry between companies and stakeholders, and reduce the expectation risk ofoutside investor and moral hazard of internal managers, in order to guide rationaldecision-making and efficient investment.The main content of this article is to explore the impact of stock mispricing andinformation transparency on investment efficiency from the enterprise level. Stockmispricing further is subdivided into the stock overvalued and undervalued andinvestment efficiency is subdivided into overinvestment and underinvestment. In thispaper, we build our hypotheses, use reports of335listed companies in ShenzhenA-share market from2007to2013as samples, and build several multiple regressionmodel for empirical analysis. Then we analyze the results and draw the correspondingconclusions and propose policy recommendations. In this paper, we use Richardson(2006) theoretical model to measure investment efficiency and calculate mispricingvariables by the method of fitting Tobin’s Q residuals.In this paper, we make the following conclusions by theoretical analysis andempirical test:(1) Stock mispricing has an negative effect on the investmentefficiency and information transparency has a positive impact on the investment efficiency. Improving information transparency may reduce the losses of efficiency ofinvestment when the corporate mispricing is in a relatively high level.(2) Relative tounderinvestment, corporate whose stock price is mispricing is more tend tooverinvestment, and whose shares undervalued is more relevant to overinvestment.(3)In the case of low information transparency, companies are more likely tooverinvestment behaviors.Chinese scholars study the stock mispricing still in its infancy and few scholarsput stock mispricing, information transparency and efficiency of investment in oneconceptual framework. This paper which is combined China’s actual institutionalcontext draw corresponded conclusions through empirical research and has someinnovation in theory and practice.