The purpose of this project is to describe and explain the foreign investment decision process in the uncertain and turbulent environment of transition economy. By getting an in-depth understanding of how decision-making works in the environment of transition economy, the study intends to contribute to the development of business administration theory in the area of foreign investment decision-making, particularly its application in the turbulent and uncertain world. Theoretical ‘blocks’, elaborated on the basis of literature study, include the following concepts: the framework of transition economy; initial motivation (or reasons) of companies to make foreign direct investments (FDI); investigation of the investment climate and information collection methods; project evaluation and investment decision criteria; risk assessment factors and risk reduction measures. Transition economy is defined in the study as ‘a non-planned, non-market economy’ where the new emerging market institutions coexist with the bureaucracy and hierarchy inherited from the old administrative system. Investment projects, therefore, should probably be seen as being under institutional influence from both the local (i.e. transition economy) and the Western investor’s home country environments. The empirical data presented in the paper also shows that it is necessary to establish the relevant economic, legal, political and social institutions in order to attract FDI. The study further includes the analysis of the main components and features of transition economies and their influence on FDI decision-making. One of the results of the study is that FDI decision-making in transition economies is largely consistent with different theoretical approaches suggested in the literature. On the other hand, the empirical support obtained for different theoretical approaches is often questionable and opened to alternative interpretations. The presented project suggests that theoretical perspectives do not preclude each other, but rather have a complimentary character. The study attempts to contribute to the mainstream FDI theories through a firm-level approach based on the case studies. Two in-depth case studies are presented in the paper: Ericsson’s direct investments in Russia and Vattenfall’s investments in the Baltic countries. A formal questionnaire based on the parameters of theoretical ‘blocks’ was created and 25 top executives from Ericsson and Vattenfall who participated in FDI decision-making were surveyed. The empirical investigation took place during the period 1997 - 1998 with partial updating of the cases during the year 2000.  The study shows that where companies confront stable environments, investment decision routines and procedures will be less necessary and important than where market uncertainty is high. The strong appreciation of the local business partners for properly done investment calculations increases the importance of capital budgeting in transition economies more than in developed market economies. Besides, traditional investment appraisal methods provide managers with an ‘objective’ or ‘materialistic’ feedback for the decision-making in the rapidly changing uncertain environment. On the other hand, the study emphasises the importance of strategy over financial techniques and argues that FDI decisions in transition economies should be based on methods consistent with the company’s long-term objectives. In case of permanent changes, new approaches as well as better co-ordination of traditional techniques with strategic, political, historical, geographical and cultural issues are required. Ericsson’ s direct investments in Russia are presented in the paper in connection with other factors: the company’s historical involvement in Russia, marketing strategy, human resource development, privatisation and restructuring of the telecommunication sector in Russia, etc. Nordic Electric Power Co-operation (Nordel), the EU’ s decision in 1996 to create an internal electricity market in Europe, Baltic ring study, future plans to privatise the energy companies in the Baltic countries, etc., are the framework to present the second case. An application of project evaluation and risk assessment techniques for broader and more complicated environments shows that investment decision-making is probably as much, if not more, a social, political and cultural technology as an economic one. The study argues then that the rational choice decision-making model often co-exists with alternative models elaborated in social science - limited rationality, political and garbage can. According to the empirical data, the investment decisions are largely based on intuition, business experience and judgement, personal contacts with representatives from the local country, and these investment criteria are inevitable and acceptable in a situation of total chaos and permanent change. The right chosen partner, for example, is one of the major criteria for the success of the investment project in a transition economy. One of the outcomes of this study is that the revitalised form of investment decision-making will differ rather markedly from much of what has gone before: less emphasis on the quantitative aspects of capital budgeting, more on the qualitative aspects of companies and investment environment. The project also argues that determinants, approaches and criteria of investment activity in transition economies are largely consistent with patterns observed in other parts of the world. A few specific environmental conditions of transition economies, however, are shown in the study to affect the pattern of FDI decision-making. The level of turbulence is still different compared to the developed market economies due to uncertainties and unpredictibilities associated with environment of transition economies. Other major differences are the large power distance with authoritarian leadership, strong hierarchy and bureaucracy as well as the vital role of personal contacts in transition economies. It is not clear, however, if these features of transition economies should be seen as inherited from the past communist system or as an alternative way to organise the economic actors through networks, a way that is natural and appropriate for the majority of Asian societies.

This paper deals with issues in the influence emission trading has on investment decisions. It explains the system of emissions trading and focuses on the emergence and development of European emissions trading and describes its influence on the Czech Republic. It briefly describes questions of investment decisions in a company, in particular the methods and criteria of investment decisions. The main goal of the paper is to analyse the influence of emissions trading on investment decisions. The analysis is made using investment projects in a real company. With the help of economic evaluation of investments, it classifies variations of investment projects when the influence of emission trading is excluded or with different prices of emission allowances. Using this analysis, I will try to prove that emissions trading can disadvantage some investments, which would otherwise be economically effective and feasible.

[pt] Este trabalho tem o objetivo de aplicar os conceitos das Finanças Comportamentais (FC) através da Teoria do Prospecto na tomada de decisões de investidores no Brasil. Os primeiros estudos publicados sobre o tema são datados de 1979, feitos por Daniel Kahneman e Amos Tversky. As Finanças comportamentais surgem para contestar a Hipótese dos Mercados Eficientes (HME), na qual os investidores são completamente racionais e que, no processo de tomada de decisão, são capazes de analisar a totalidade dos dados disponí­veis e que todos os agentes do mercado possuem o mesmo número de informações. Este novo modelo incorpora aspectos da psicologia e da sociologia na busca de uma maior compreensão do processo decisório no mercado financeiro. O presente estudo replicou o questionário do artigo seminal de Kahneman e Tversky (1979) em 40 pessoas que trabalham ou já trabalharam no mercado financeiro. Para análise destes dados foram realizadas comparações com os resultados encontrados por Kahneman e Tversky (1979), Cruz, Kimura e Krauter (2003) e Rogers, Securato, Ribeiro e Araújo (2007). A amostra estudada indica que os decisores tendem a serem avessos ao risco no campo dos ganhos e propensos aos riscos no campo das perdas. / [en] The present study aims to apply the concepts of Behavioral Finance (BF) using the Prospect Theory in decision-making by investors in Brazil. The first published studies on the topic are from 1979, by Daniel Kahneman and Amos Tversky. The Behavioral Finance emerged to contest the Efficient Capital Market (EFM) Theory, where investors are thought to act rationally in the process of decision-making, taking into account all available data, and financial agents share the same information. This new model intertwines psychological and sociological aspects seeking a greater understanding in financial decision-making. The present study applied the same questionnaire used by Kahneman & Tversky (1979) in their seminal paper to 40 subjects, working on or retired from the financial market. In the data analysis, results were compared to those of Kahneman & Tversky (1979); Cruz, Kimura & Krauter (2003); and Rogers, Securato, Ribeiro & Araújo (2007). From our analysis we find that investors run from taking risks while generating gains and are prone to assume those risks while losing capital.

Les perspectives énergétiques globales soulignent une demande croissante d'énergie sur les prochaines décennies. Le pétrole brut devrait représenter environ 35% de l'offre d'énergie primaire à l'horizon 2030 d'après l'AIE. Parmi les sources d'approvisionnement, les hydrocarbures "non conventionnels" devraient contribuer significativement à l'offre de produits pétroliers, puisqu'ils présentent un intérêt stratégique en termes de réserves et d'indépendance énergétique. L'objectif de cette thèse est l'étude du potentiel de développement des ressources d'hydrocarbure non conventionnelles sous différents scénarios liés au contexte économique et environnemental. Les sables asphaltiques, principalement localisés au Canada, constituent notre cas d'application. La première partie de cette thèse a mis en évidence deux phases de développement: la première, de 1980 à 2005, correspondant à l'émergence de la filière grâce à des leviers réglementaires, économiques et géographiques; la seconde, amorcée en 2005 avec la dégradation du contexte économique, pendant laquelle le développement de la filière s'est fortement ralenti. La seconde partie de cette thèse porte sur l'analyse prospective à horizon 2050. L'élaboration d'un premier modèle basé sur la programmation linéaire a permis de quantifier l'offre tendancielle sous différents scénarios déterministes de prix et de réglementations environnementales. En particulier, la décision d'investissement apparaît significativement impactée par l'introduction d'une taxe CO2. Un second modèle basé sur la programmation dynamique a permis d'évaluer l'offre prospective en présence d'incertitudes. Un impact négatif de l'incertitude et de la volatilité des prix sur la décision d'investissement a été mis en évidence, avec ou sans réglementation environnementale. Cet impact négatif est accentué lorsqu'une incertitude supplémentaire sur le cadre réglementaire environnemental est introduite. / International energy outlook emphasizes an increasing energy demand over the next decades. Crude oil should represent about 35% of primary energy supply by 2030 according to the IEA. Among supply sources, non conventional crude oil should contribute significantly to the supply of petroleum products, being strategic in terms of reserves and energy independence. This thesis aims to evaluate the development potential of non conventional crude oil using different scenarios regarding the economic and environmental context. Oil sands, essentially located in Canada, constitute our application. The first part of this thesis highlights two development phases: the first one, from 1980 to 2005, corresponding to the emergence of the oil sands sector through regulatory, economic and geographical levers; the second one, started in 2005 with the deterioration of the economic climate, during which oil sands development slowed down significantly. The second part of this thesis focuses on the prospective analysis of the horizon 2050. Firstly, the development of a supply model based on linear programming allowed us to quantify non conventional oil trend supply under deterministic price and environmental regulation scenarios. In particular, investment decision is significantly affected by the establishment of a CO2 tax. Secondly, the development of another supply model based on dynamic programming allowed us to evaluate future non conventional crude oil supply under uncertainties. A negative impact of price uncertainty and volatility on investment decision is highlighted, under or without environmental regulation. This negative impact is strengthened by the introduction of a supplementary uncertainty in environmental legal framework.

Os organismos reguladores da Contabilidade ao optarem por um usuário-alvo da informação contábil, na atualidade, tem dado ênfase aos investidores. As normas contábeis visam, em teoria, a geração de informações que sejam úteis e relevantes no processo decisório desses usuários. Entretanto, além do conteúdo, o formato de apresentação das demonstrações contábeis pode afetar a maneira como seus usuários incorporam-na em seus processos decisórios. Considerando os investidores como agentes racionais limitados, supõe-se que esses agentes buscam otimizar suas escolhas e consideram o custo-benefício das informações disponíveis, em vista da sua limitada capacidade de processamento. Nesse contexto, a literatura vem destacando que o formato de apresentação das demonstrações contábeis é capaz de afetar a atratividade das decisões sobre investimentos, o que, por consequência, pode influenciar o modo como as entidades divulgam suas informações financeiras. As preferências pelo formato de apresentação das informações contábeis podem ser intensificadas quando as entidades direcionam esse formato, visando destacar as informações que transmitam uma melhor posição financeira das mesmas, segundo o argumento da miopia do mercado acionário. Neste sentido, este estudo teve como objetivo verificar o impacto do formato de apresentação do Resultado Abrangente e da realização dos Outros Resultados Abrangentes (ORA) na decisão de investimento no mercado de capitais. Para o desenvolvimento da pesquisa, foi realizado um experimento 2 X 2 entre sujeitos, com 171 estudantes de pósgraduação lato sensu (MBA), e duração média de vinte minutos. Para a análise dos dados coletados, foi utilizado a técnica estatística de análise de covariância (ANCOVA), visto que a variável dependente era quantitativa e foram utilizados fatores quantitativos e qualitativos para explicar o comportamento dessa variável. Os resultados encontrados indicam que para as variáveis de investimento em ações e investimento em ações ponderado pela atratividade, a influência do formato de apresentação das demonstrações financeiras, deu-se apenas na variável multiplicativa entre aversão ao risco e o fato de se trabalhar em empresa financeira, como também entre ter experiência em investimento e o fato de se trabalhar em empresa financeira. Porém, como não foi possível segregar o efeito entre elas nas variáveis dependentes, não foi possível afirmar que o formato de apresentação separado do Resultado Abrangente afeta a atratividade de investimento. A temporalidade, em nenhuma das variáveis dependentes, demonstrou impactar a atratividade de investimento. Ao analisar o efeito interativo do formato de apresentação e a temporalidade dos ORA, não foi possível afirmar se houve impacto na atratividade do investimento. Com base nos resultados encontrados, não foi possível afirmar que o formato de apresentação da Demonstração do Resultado Abrangente (DRA) e da realização dos ORA ao Lucro Líquido (LL) impactam na decisão de investimento no mercado de capitais. O estudo possui limitações, principalmente em relação à técnica aplicada, à utilização de estudantes como proxy de investidores não profissionais, variáveis não controladas pelo ambiente experimental e possível desconhecimento do que é o Resultado Abrangente por parte dos respondentes. / Choosing a accounting information target user, nowadays, the accounting regulator bodies have emphasized to investors. In theory, accounting rules aim to generate information which is useful and relevant at those users\' decision-making process. However, besides the content, the financial statements presentation format may affect the way the users incorporate them into their decision making processes. Considering the investors as limited rational agents, this study has assumed that those agents seek to optimize their choices and consider the costbenefit of information availability, because of their limited processing capacity. At this context, the literature has highlighted that the financial statements presentation format can affect the investment decisions attractiveness, which, consequently, can influence how the entities disclose their financial information. The preference for the financial information presentation format may be intensified when entities direct the format in order to highlight the information that convey a better financial position, according to the argument of stock market short-termism. Therefore, this study aimed to determine the Comprehensive Income (CI) presentation format impact and the Other Comprehensive Income (OCI) maturity at investment decisions at the capital market. To develop the research, an 2 X 2 between subjects experiment design was conducted, with 171 MBA students, and average duration of twenty minutes. For data analysis, this study used the statistical technique of analysis of covariance (ANCOVA), as the dependent variable was quantitative and quantitative and qualitative factors to explain the behavior of that variable were used. The results indicate that the variables for investment at shares and weighted attractiveness investment at shares, the influence of the financial statements presentation format has been only in the multiplicative variable between risk aversion and the fact of the participant works at a financial company, as well as having experience in capital market investment and the fact of the participant works at a financial company. However, as it was not possible to segregate the effect on the dependent variables between them, it was not possible to say that the CI presentation format separately affects the investment attractiveness. In all dependent variables, maturity did not demonstrate to impact the attractiveness of investment. By analyzing the interactive effect between presentation format and the OCI maturity, it was not possible to say whether there was an impact on the investment attractiveness. Based on these results, it was not possible to say that the Comprehensive Income Statement presentation format and the OCI realization to Net Income impact on investment decisions at the capital market. The study has limitations, especially related to the applied technique, the use of students as a proxy for investors, experimental environment variables which were not controlled and misconceptions of what is the Comprehensive Income for the respondents.

Industrial energy efficiency is one of the most important means of reducing the threat of increased global warming. A higheruse of electricity than their European competitors, together with increased energy costs due to increasing energy prices in Swedish industry have negative impacts on results and competitiveness. Of great importance are thus different means which promote energy efficiency such as industrial energy policy instruments. However, cost-effective energy efficiency measuresare not always undertaken. In order to formulate and adopt accurate industrial energy end-use polices, it is thus of importanceto identify the barriers that inhibit the implementation of cost-effective energy efficiency measures. It is also of importance to identify the factors which promote the implementation. The aim of this thesis is to analyze industrial energy systems andmore specifically study factors that promote or inhibit energy end-use efficiency in Swedish industrial companies. Results from this thesis show that the implementation of technical energy efficiency measures is a major means for both energy-intensive and non-energy-intensive Swedish companies to overcome the threat of rising energy prices, for example for electricity. While energy efficiency measures in the non-energy-intensive industry are related mainly to support processes, measures in the studied energy-intensive Swedish foundry industry are related to both support and production processes. In the various case studies of barriers and driving forces, the most significant barriers to energy efficiency - with largevariations for some of the barriers among the studied cases - were found to be: technical risk such as risk of productiondisruptions; lack of time or other priorities; lack of access to capital; cost of production disruption/hassle/inconvenience; other priorities for capital investments; technology considered inappropriate at the site; difficulty/cost of obtaininginformation about the energy use of purchased equipment; and lack of budget funding. The largest driving forces, apart fromcost reductions resulting from lowered energy use, were found to be the existence of a long-term energy strategy and peoplewith real ambition. These driving forces did not, unlike the results of barriers to energy efficiency, vary widely across thestudied sectors. Investment decision support such as optimization has shown to add more information for larger capital-intensive investmentsin energy-intensive industrial SMEs. The thesis also showed that energy audits are an effective means, in terms of publicmoney spent per kWh saved, of providing the industry with information on potential energy efficiency measures. Based on the results presented in this thesis, a policy approach towards non-energy-intensive companies and industrial SMEsshould primarily include providing energy audits free of charge and involve the local authority energy consultants. / Industriell energieffektivisering är ett av de viktigaste sätten att reducera hotet om en globaluppvärmning. En högre relativ elanvändning, i jämförelse med europeiska konkurrenter, tillsammans med stigande energikostnader beroende av stigande energipriser för den svenskaindustrin, riskerar leda till försämrad lönsamhet och försämrad konkurrenskraft. Det är såledesav stor vikt att främja energieffektivisering, exempelvis genom olika typer av styrmedel. Lönsamma energieffektiviseringsåtgärder genomförs emellertid inte alltid, till följd av olikahinder för energieffektivisering. För att kunna formulera precisa styrmedel är det därför avstor vikt att dessa hinder som förhindrar implementering av energieffektiviserande åtgärder,identifieras. Det är också av stor vikt att identifiera drivkrafterna. Syftet med denna avhandling är att analysera industriella energisystem och mera specifikt studera faktorer somfrämjar och förhindrar effektiv slutanvändning av energi i svensk industri. Resultaten visar att hotet om stigande energikostnader, exempelvis beträffande elektricitet,både för icke energiintensiv och för energiintensiv svensk tillverkningsindustri, kan reduceraskraftigt om energieffektiv teknik implementeras. Medan åtgärder i icke energiintensiv industrifrämst är relaterade till stödprocesser så visar sig åtgärderna i den studerade svenska energiintensiva gjuteriindustrin vara relaterade till både stöd- och produktionsprocesser. I fallstudierna beträffande hinder och drivkrafter visade sig de största hindren vara - med storavariationer mellan fallen - tekniska risker såsom risk för produktionsstörningar och avbrott; brist på tid/andra prioriteringar; brist på kapital; kostnader för produktionsstörningar; ickeenergirelaterade investeringar prioriteras högre; tekniken passar ej för företaget;svårigheter/kostnader att erhålla korrekt information beträffande energianvändningen av deninköpta utrustningen; och brist på budgetmedel. De största drivkrafterna var, utöver kostnadsminskningar till följd av minskad energianvändning, förekomsten av en långsiktigenergistrategi och en eldsjäl. Drivkrafterna varierade inte, till skillnad mot hindren, så mycketmellan de olika undersökta fallen. Beslutsstöd såsom exempelvis optimering har visat sig kunna ge ökad information vid störremer kapitalintensiva investeringar i energiintensiva små- och medelstora företag. Vidare har energianalyser visat sig vara ett effektivt sätt, i termer av besparad kWh per statligt insattkrona, att ge industrin information beträffande möjliga energieffektiviserande åtgärder. Resultat från avhandlingen indikerar att ett stöd gentemot icke energiintensiva och små och medelstora företag framförallt bör inkludera statligt finansierade energianalyser med denlokala energirådgivaren som en deltagande aktör.

Bachelor thesis within Business Administration Title: Behavioral Finance – The Student Perspective Authors: Kamran Sairafi, Karl Selleby, Thom Ståhl Tutor: Urban Österlund Date: 2008-05-30 Background: History is full of examples on how humans can create investment bubbles through speculation; from the Dutch tulip mania to the Dot Com bubble humans have proven to be capable of creating economical chaos. Classical economical theories hold the assumption that individuals act rationally regarding decisions of an economical nature. Since the information on the stock market is available to everyone who seeks it, the appearance of investment bubbles should not be possible. Behavioral finance is an academic branch which seeks to explore these phenomenons through the psychological factors affecting humans in investment decisions. Purpose: The purpose of the report is twofold. Firstly it is to examine the characteristics of investment interested business students enrolled at Jönköping International Business School. Secondly it looks into the decision-making process and choices of the population from the perspective of behavioral finance. Method: This research holds an abductive approach and is based on qualitative data. Data collection was done through an Internet-based questionnaire containing several different questions on the areas related to the inquiries. In some cases statistical analysis was conducted to test for significant correlation between key characteristics. Results: A statistically proven correlation could be discerned between trading experience and frequency; for each additional year an individual engaged in trading the frequency increased. Herd behavior was detected in a majority of the sample. When faced with a scenario in which their immediate surrounding opposed their own analysis of a stock, the greater part of the sample would reconsider their position. Two main sub-groups were detected. The first was characterized by its high tolerance of risk; the second subgroup was characterized by its inconsistency in behavior. Conclusions: This paper found that the behavior of respondents in the chosen population was best described as “student behavior”; a somehow irrational behavior explained by the learning process in which business students exist.

In industry, energy efficiency reduces system cost and emissions to the environment. Energy audits are carried out in industry to identify measures that would increase energy efficiency. However, the usual case is that low-cost measures are implemented while capital intensive measures receive less attention possibly due to, example, inadequate information available to study risks involved. Decisions support tools have been identified as a means of supporting complex production related investment decision. The aim of this paper is to investigate profitability and potential global CO2 emission reduction of energy conversion investments in a small energy intensive industry by using an optimisation method as a decision support tool. The investments are evaluated using consistent future energy market scenarios with interdependent parameters. An optimisation model is developed with reMIND optimisation tool which is used to optimise the system cost of each scenario. The reduction in system cost and global CO2 emissions of the new investments and results from sensitivity analysis are evaluated to determine the optimal investment solution. In the report, it is established that optimisation methods provide a structured means of studying the risk involved in capital intensive investments. The optimisation results show that investment in a small-scale steam turbine combined heat and power production is a profitable and robust investment. The net reduction of global CO2 emission is substantial compared with the reference system. Furthermore, it is shown that biofuel policies alone may not make cost intensive biofuel investments attractive, further reduction in investment cost is required. The energy savings and global CO2 emission reductions achieved in this study can play an important role in achieving the aims of the European Union to reduce greenhouse gas emissions by 20% and save 20 % of energy by the year 2020.

Syfte: Syftet med studien är att undersöka och presentera vilka investeringskriterier som svenska kommuner använde år 2011 vid byggnadsinvesteringar, samt i vilken utsträckning extern hjälp vid investeringsbedömning och utförande av byggnadsinvesteringar användes. Frågeställning: Vilka samband fanns mellan investeringsandel per omsättning och i hur stor utsträckning beslutade byggnadsinvesteringar blev dyrare än beräknat? Vilka skillnader fanns mellan större och mindre kommuner med hänsyn till investeringsbedömningar i byggnader? I vilken utsträckning förekom samarbete mellan kommuner gällande byggnadsinvesteringar? I hur stor utsträckning anlitades extern hjälp med projektledning och kalkylering vid byggnadsprojekt? Metod: Studien är baserad på en webbenkätundersökning med 44 deltagande kommuner och en personlig intervju. Denna undersökning analyserades och jämfördes sedan med en referensram baserad på sekundära källor. Slutsats: Större kommuner behöver förbättra sina planeringar och kontrollera sina byggnadsinvesteringar i och med att investeringarna ofta är större och fler saker kan gå fel än för mindre kommuner. Fler kommuner borde samarbeta mer vid byggnadsinvesteringar för att på det viset kunna matcha byggföretagen vid upphandling. Kommunerna bör fortsätta kontrollera den externa hjälp de använder vid byggnadsinvesteringar och göra tydliga kontrakt. / Purpose: The purpose of this study is to examine and present what investment criteria’s Swedish municipals used in 2011 when investing in buildings, and in what extent consultants were used in investment appraisal and implementation of building investments. Research question: Is there a connection between the amount invested in buildings in proportion of net turnover and cost overrun? Is there a difference between large and small municipals with regards to investment appraisal of buildings? Did collaboration occur between municipals with regards to investment appraisal of buildings? To what extent was consultants used to calculate and appraise building projects? Method: This study is based on a Web survey with 44 answers from municipals and one personal interview. The survey was analyzed and compared with the frame of reference based on secondary sources. Conclusion: Larger municipals need to improve their planning and control their investments in buildings because the investments are usually large and more numerous things can go wrong than for smaller municipals. Municipals should collaborate more when investing in buildings and therefore better be able to match the construction companies when negotiating terms. The municipals should continue controlling the external help they use when they invest in buildings and make contracts with clear terms.

This study focuses on whether the mispricing of investor has relevance for firm¡¦s investment decision. In other words, it tries to test the relation between mispricing of investor and managers¡¦ catering behavior. In addition, this study divides Taiwan¡¦s companies into three cases: Listed and following listed companies, OTC companies and companies under the counter. The period of this study from 1986 to 2009, it excludes firms with negative book value of assets, and only uses the positive capital expenditure data. This paper divides the sample into various subsamples discussed separately. For example, it uses the R&D ratio as the proxy for information transparency and explores that information transparency may affect manager¡¦s catering behavior in the different subsamples. Besides, this study also separates the companies from different stock turnover rate to discuss whether the impact of mispricing to the rate of investment will be different. The results showed that indeed mispricing change the rate of investment of companies. After that, this paper controls the independent variables which may affect the company¡¦s profitability to figure out the abnormal rate of investment. Finally, this study finds that abnormal rate of investment result in a poor return of companies. That is to say, when a manager caters the mispricing of investor in stock market, afterwards, may lead to a poor return of companies. In the view of investors, when the market¡¦s sentiment that is too warm, many companies begin to invest in plant. At this time, investors shall examine whether the investment of companies is efficient.