Investor sentiment, chairman-CEO duality and R&D investment

With a sample of Chinese listed firms during 2007-2010, the paper studies the impact of the investor sentiment on firm's R&D investment, and the results suggest that the firms' management do not catering investor sentiment significantly. But when the study import the variable of chairman-CEO duality and its interaction with investor sentiment, it is suggested that the stock mispricing which induced by investor sentiment and chairman-CEO duality have a positive effect on firms' R&D investment. Furthermore, the coefficient of the interaction of investor sentiment and chairman-CEO duality is negative significantly, which suggests that the firms with board member act as CEO will cater investor sentiment through R&D investment, while the firms which separate of chairman and CEO will make investment decisions more rationally.