The Effect of Mispricing on Investment and Capital Structure of Financial Constraints Firms

Document Type : Research Paper

Authors

1 Assistant Prof. Financial Management, Faculty of Social Sciences & Economics, Alzahra University, Tehran, Iran

2 MSc. in Accounting, Faculty of Management and Economics , Science and Research Islamic Azad University,Tehran, Iran

Abstract

The objective of this study is to examine the effect of mispricing on firm’s investment behavior and capital structure. It also tests the role of the level of financial constraints in the relationship between mispricing , investment and capital structure. Using data of 110 firms of Tehran stock exchang from 1384-1389, results indicated that mispricing has negative impact to firms investment. However, this effect only slightly different whether on high financial constraint firms (financially constraint) or on low financial constraint firms (less constraint). Moreover, this research also find that mispricing influence firm’s capital structure. Based on the finding in study, it has positive impact to firm’s capital structure. However, mispricing has negative impact to firm’s capital structure in high financial constraint firms. In this study is used of statictical method panel data.

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References

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Financial Research Journal
Volume 16, Issue 2 - Serial Number 2
Autumn & Winter
October 2015
Pages 289-308

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