firms in making their investment decisions. We use a revealed preference approach that relies on the pattern of investment … spending - combined with investment theory - to estimate the discount rates used by managers. The standard story predicts that … firms with high stock prices and good investment opportunities should have discount rates that do not differ systematically …

Peers' valuation matters for firms' investment: a one standard deviation increase in peers' valuation is associated … with a 5.9% increase in corporate investment. This association is stronger when a firm's stock price informativeness is … lower or when its managers appear less informed. Also, the sensitivity of a firm's investment to its stock price is lower …