Abstract
Using a sample of firms listed on the Chinese stock markets from 2003 to 2012, this paper investigates the impact of managerial shareholding on corporate investment decisions and the equity valuation of the growth/adaptation options from the perspective of the real options-based valuation theory. In addition, it examines whether the relationship between managerial shareholding and corporate investment and equity valuation varies with the type of ownership. The empirical results indicate that managerial shareholding can enhance the flexibility of management investment, increasing the equity value attributable to the growth and adaptation options. Further analyses show that such effects are found primarily in private firms