A Herd Behavior Study During China's Equity Segmentation Revolution

Since the establishment of the Chinese stock market, the reform of financing system and enterprises financing behaviors has been a hotspot for most scholars. Many researches have been focused on the subject, especially the relationship of the two, but few has been made on the investor behaviors.This article is a demonstrative study for the herd behaviors that sticking to the market index during the China's equity segmentation Revolution. We find out that the herd behaviors did exist during the period. And this herd behavior could be defined as"spurious herding".Trying to find the co-influence between the government and the market investors during system reform is the main point of this article. Some carefully study of the investors'behavior and the market index is also made.In the study of the result, the difference between"utility function"from prospect theory is discussed and the over-reaction is the key point that decides if a policy could be carried out successfully.On the base of the finding, some policy advices were made at the end of this article.