Abstract
This study investigates the effect of investors’ sentiments on the corporate investment efficiency of the selected sector companies
of Pakistan’s stock exchange with the mediation effect of credit financing. Mainly, four sectors, among which only 13 public
listed companies are selected. Panel techniques are used and data is collected from the published financial reports of the
companies of last 10 years (2006 to 2015). Share turnover is used to examine the investors’ sentiments. This study discovers that
there is a positive relationship between the investors’ sentiments and over-investment of the organizations and vice versa, while
investors’ sentiments have a significant impact on investment efficiency with the partial mediating role of credit financing but
only in case of underinvestment. Investors’ sentiments do have a significant effect on overinvestment but it is not due to the
mediating role of credit financing. Due to the optimistic investors’ sentiments, the credit supply is increased, but firms would
have more funds to invest which may cause abuse of corporate funds, but due to strong supervision functions, this problem is also
reduced.
Abrar Hussain, Mehrish Abdul Qayyum. (2019) A study on the impact of Investors’ sentiments on corporate investment efficiency through mediating effect of Credit Financing, Paradigms , Vol 13, Special Issue.
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