Investors' Overconfidence Analysis Of China Stock Market

In the 1980s, some financial anomalies has brought great challenges to traditional finance, and the behavioral finance emerged as the times required, it makes these financial anomalies understood. The theory explains many financial anomalies by its special perspective of psychology, such as equity premium puzzle, the volatility Puzzle, under-reaction and over-reaction, lots of empirical and experiential research verify significance of existence of the behavioral finance.This is the most explanatory behavior finance theory of kinds of behavior finance theories-overconfidence effect analysis, this paper begins with its theoretical research background and its theoretical meaning on the stock market, then lists many effects of investors overconfidence, finally it focuses on studying the China stock markets investors overconfidence with special financial background-the global financial crisis. The paper applies empirical research to study overconfidence of China stock market investors, with statistics of the Shanghai stock index and SZSI in China stock market and being divided into three stages:the early, middle and later time of financial crisis, verified investors overconfidence respectively during there different periods in the China stock market.According to the empirical study results, this paper obtained the inspiration and relevant policy suggestions, The inspiration includes three points as follows, first, the past study of overconfidence is developed mainly by qualitative analysis,we need to improve the quantitative analysis.Second, the model of evaluation about overconfidence should be complemented. Third, Empirical Studies and experimental study should be combined to analyze the overconfidence. There are also three policy proposals. First, this overconfidence analysis provides a new idea to market regulation. Second, new mode is offered for stock market intervention. Third, it can make the market educate and guide the investors pointedly. We can use it to solve the problem about market fluctuation, in order to promote the development of the China stock markets much more healthy and stable.