Research On The Influence Of Investor Sentiment On Corporate Investment Decision In China

In the time of classical economics,Adam Smith put forward the idea that emotion was one of the most important referential factors affecting economic analysis.This idea has been inherited and constantly developed during the period of Keynesian economics.However,after John Maynard Keynes,many subsequent neoclassical economists gradually shift their attention to rational choice model and abandon the influence of emotion out of the economic analysis.With the rapid development of behavioral economics,the research achievements of behavioral economists such as Daniel Kahneman,Richard Thaler who won the Nobel Prize in economics in 2017 have been widely recognized.People gradually realize the deficiencies of 'completely economic person' hypothesis,the key role of non-rational factors such as emotions in economic decision-making,as well as developing the viewpoint of limited rationality based on this point,which once again values the influence of emotional factor.In recent years,scholars have generally recognized the idea of investors' emotions as the factor which causes market mispricing.Based on this point,researchers has been focusing on the influence of investor sentiment on the corporate decision-making in the context of the real economy.In the current stage,scholars mainly concentrate on the developed countries with mature financial market as the research sample but relatively much less on the developing countries or immature financial markets.After 40-year development of the reform and opening-up policy,China has been the most successful country among the developing countries and the domestic financial market has developed dramatically.Meanwhile,the influence and importance of China around the world have been improving significantly.By comparing the features between the domestic market and developed market,it is discovered that the non-rational behavior of Chinese investors is more common and the influence of investors'emotion is more obvious.Therefore,it is of great theoretical and practical significance to study investor sentiment in China.This paper not only provides a new reference for corporate governance in China,but also a new enlightenment for regulating the investment behaviors of investors,as well as a new reference for the design of relevant market supervision of Chinese market.In that the financial market with Chinese characteristics,this paper tries to extend the hypothesis of 'completely economic person' in traditional economics,summarize both the research results of investor sentiment and decisions regarding corporate investment,and conduct theoretical analysis and empirical tests accordingly.In addition,with the introduction of research methodologies of Polk and Sapienza(2009),Baker et al.(2003),this paper deeply analyzes the way to influence of investor sentiment on corporate investment decision in China,effect paths,as well as the economic consequences,in terms of corporate investment level,corporate investment structure and corporate investment efficiency so as to further determines the final effect of investor sentiment on the corporate value.Firstly,in the process of investor sentiment affecting corporate investment level,the applicability of catering channel and equity financing channel in China is tested respectively,and the role of the two channels is compared.The results show that:(1)there is a significant positive correlation between investor sentiment and corporate investment level in China,and catering channels plays a more obvious role than equity financing channels.(2)the influence of investor sentiment on the investment level of equity-dependent corporate is more obvious than that of non-equity-dependent corporate.(3)the higher the stock turnover rate gets,the higher the sensitivity of its investment level to investor sentiment will be.Secondly,from the perspective of corporate investment structure,the paper distinguishes the types of corporate investment,and investigates the difference between the influence of investor sentiment on corporate fixed asset investment and R&D investment.The results show that:(1)the influence of investor sentiment on R&D investment of domestic Chinese corporate is by no means more obvious than that of fixed asset investment.(2)R&D investment in economically developed regions is significantly more affected by investor sentiment than that in economically underdeveloped regions.(3)R&D investment of non-state-owned corporate is more dramatically influenced by investor sentiment than that of state-owned corporate.Moreover,based on the perspective of corporate resource allocation efficiency,this paper analyzes the influence of investor sentiment on corporate investment efficiency,and validates whether investor sentiment will inevitably lead to the invalidation of corporate capital allocation by easing the assumption of constant optimal investment level.The results show that:(1)the upsurging investor sentiment will worsen the over-investment of corporate,while the declining investor sentiment will deteriorate the insufficient investment of corporate.(2)in various market cycles,the impact of investor sentiment on the corporate investment efficiency is asymmetric.In the upward market cycle,the corporate investment efficiency is greatly affected by the investor sentiment,whereas in the downward one,it is the opposite.Finally,evaluating the ultimate influential results of investor sentiment on corporate investment decision at the micro levels,at which the influence on corporate value is investigated.The results show:(1)investor sentiment has a significantly positive effect on corporate value.The rising investor sentiment contributes to the promotion of corporate value,while the depressing investor sentiment will lead to the reduction of corporate value.(2)with the effect of capital structure,there is a non-linear relationship between investor sentiment and corporate value.When the capital structure of a corporate is lower,investor sentiment therefore has a more positive effect on corporate value.When the capital structure of a corporate is higher,investor sentiment has a weaker effect on corporate value.The innovation of this paper is specifically presented as follows:Firstly,based on the characteristics of China's financial market,this paper builds a number of panel data models with all dimensions in order to empirically test the influence of investor sentiment on corporate investment decision in terms of corporate investment level,corporate investment structure and corporate investment efficiency respectively,as well as to verify the final effect of this influence in terms of corporate value.This paper further enhances the relevance,reliability and scientificity of the research conclusions in this field,reflecting the innovation of the research ideas and framework of this paper.Secondly,in the process of corporate investment decision affected by the investor sentiment.This paper provides a new perspective of the investment structure to distinguish different corporate investment types and influences of investor sentiment on corporate fixed assets investment,and on R&D investment,in comparison with the degree of the influence of investor sentiment on corporate in different regions with different economic development levels on different investment types,which provides corporate with a new way of thinking to combine their specific conditions,choose suitable investment types,build a reasonable investment structure,and carry out scientific internal governance.Thirdly,this paper thoroughly explores the non-linear influence mechanism of investor sentiment on corporate value in China,especially the capital structure which is put into their analysis framework.From the perspective of empirical research,it is proved that investor sentiment has a considerably advantageous impact on the corporate value in China,and the impact is nonlinear under the influence of capital structure.This shows that investor sentiment will not necessarily hinder the future development of corporate,but also may promote the corporate value.This conclusion tends to exceedingly enrich and promote the research on the relationship between investor sentiment and corporate investment.