| Black (1986) thought that the noise is an concept with respect to the information, and based on the Kyle's (1985) study, he further defines the noise trader as the one who does not have the insider information actually but treats the noise as the effective information and carries on the transaction. It is not difficult to discover that the noise trade is based on the false information or other information which the investor understand wrongly. We may discover that the noise transaction widely exists in the stock market and is harming the stock market validity from the existing research literature. Either from the volatility of stock index and the volatility of the stock index rate or from the turnover rate and the noise factor, we could find the valid evidence of noise trade's harming stock market. After the introduction of the term of noise in finance, it opened people's understanding thought and the cognition field of vision and helped to understand the essence of the things. Based on these information, the purpose of this paper is to find the factors influencing noise trade and discover the way to alleviate the inefficiency of the stock market. The current study about the noise transaction is little, there are very few papers which study the origin of the noise transaction from the macroscopic angle. Therefore, we are trying to study the factors which influence the noise trade from entire stock market.This article contains six parts altogether:The first chapter:introduction. Reviewed the development of behavioral finance, the noise trade is of importance to the research in stock markets. That many literature indicates the noise trade made the stock market inefficiency becomes the background of this article.At the same time, the research mentality and frame has been given.The second chapter:the summary of literature. De Long etal(1990) found that the noise traders wildly exist in the stock market, and this conclusion was supported by many scholars(Froot etal,1992; Gemmill and Dylan C. Thomas,2002). There are so many fields were researched but the factor influencing the noise trade, so I will continue to study in this field.The third chapter:the preliminary introduction of the relations between the noise trade and the fluctuation of stock market.The forth chapter:the research design. This article firstly reviewed the mature theory in behavioral finance. Then, based on the hot topic in the stock market, I proposed the research supposition. The variables were designed lastly.The fifth chapter:Empirical Analysis. The sample was chosen from the data from 2003 to 2007. The valid data is 5114 in all. The linear model was given in this part and then we gained the conclusion.The sixth chapter:the conclusion and suggestion. Based on the conclusion, I have given the policy suggestion, and then I just pointed out the contribution and the deficiency.The contribution in the article:Focusing on the hot topic, I firstly found the factors influencing the noise trade by empirical method. At the same time, I supposed the policy suggestion based on my research conclusion. Second, I found the solutions to smooth the fluctuation of the stock market. And then I made up the vacuity of the literature.The deficiency in the article:I didn't catch all the hot topic in the stock market, and so I didn't suppose a perfect solution to smooth the fluctuation of the stock market. At the same time, the empirical analysis also indicates I missed some factors. |
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