Investigating the Effect of Managers’ and Market Perceptions Regarding Firm’s Value on Capital Expenditures in Imperfect Markets Considering Agency Problems

This study investigates the factors that play an important role in managers’ decisions toward capital expenditures. Sample of 60 firms of Tehran Stock Exchange (TSE) for the period of 2006-2011 were selected and examined through correlation analysis. The findings show that perception of managers and market, regarding firm’s value (using substituted variables) affect firms’ capital expenditures. Also, findings reveal that the higher the free cash flows, the stronger the relationship between perception of managers and market regarding firm’s value and capital expenditures, and the higher the sensitivity of capital expenditures to variables substituted for perception of managers and market, regarding firm’s value.