The Moderating Role of Institutional Ownership in Relationship between Stock Mispricing and Investment

The phenomenon of stock mispricing and its impact on the decisions and behavior of managers and investors is a new field in financial science research. The purpose of this study was to investigate the effect of stock mispricing on investment behavior and the effect of institutional shareholders on this relationship in companies admitted to Tehran Stock Exchange. In order to carry out the research, we selected 170 companies from Tehran Stock Exchange listed in the Tehran Stock Exchange for the period from 2010 to 2016 and with using panel data method in this time period has been tested and evaluated. To measure mispricing, the breakdown of market value to book value was used according to Rhodes-Cropf et al. (2005). In order to estimate the models and test the hypotheses, multivariate regression was used with generalized least squares estimation and related tests. The results of the tests showed that, firstly, there is a positive, significant and strong relationship between the stock mispricing and investment; secondly, the percentage of institutional ownership has a reciprocal and significant effect on the relationship between mispricing - investment.