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The real impact of stock market mispricing — evidence from Australia

Chang, Xin, Tam, Lewis H. K., Tan, Tek Jun and Wong, George 2007, The real impact of stock market mispricing — evidence from Australia, Pacific-basin finance journal, vol. 15, no. 4, pp. 388-408, doi: 10.1016/j.pacfin.2006.06.003.

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Title The real impact of stock market mispricing — evidence from Australia
Author(s) Chang, Xin
Tam, Lewis H. K.
Tan, Tek Jun
Wong, George
Journal name Pacific-basin finance journal
Volume number 15
Issue number 4
Start page 388
End page 408
Total pages 21
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2007-09
ISSN 0927-538X
Keyword(s) Investment-Q sensitivity
Market inefficiency
Equity dependence
Investment
Australian firms
Summary Using a large panel of Australian firms, we investigate if mispricing in the stock market has an impact on firm-level investment. A significantly positive relation is documented between investment and theproxies for mispricing, suggesting that overpriced (underpriced) firms tend to overinvest (underinvest). Furthermore, we find that equity-dependent firms display a more pronounced sensitivity of investment to stock misvaluation than do nonequity-dependent firms. Taken together, our findings evidence that mispricing in Australian capital markets may have significant influence on the real economy, and the influence works though an equity-financing channel.© 2007 Elsevier B.V. All rights reserved.
Language eng
DOI 10.1016/j.pacfin.2006.06.003
Field of Research 150205 Investment and Risk Management
1502 Banking, Finance And Investment
1501 Accounting, Auditing And Accountability
Socio Economic Objective 970115 Expanding Knowledge in Commerce
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2007, Elsevier B.V.
Persistent URL http://hdl.handle.net/10536/DRO/DU:30085867

Document type: Journal Article
Collection: Department of Finance
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