Study On China's Stock Market Investor Of Irrational Behavior

With the rapid development of our economy, the stock market has achieved remarkablesuccess and has played an important role in the international financial market. Because ourcountry's special economic background ,the development time of stock market is short and lackof experience ,there are some problems in the stocks market .But ,company with the rapiddevelopment ,there have not any corresponding investors group that could matching thisdevelopment ,investors without a comparatively mature style on investment concept andpsychology . If the health and ration of the individual investors in the investment activities or not,determine how the stock market's healthy, sustainable and stable development is .So, it isimportant for analysis the market and prerequisite of investor protection rights, to analysis thebehavior and the psychological characteristics aiming at the behavior people invest in stocks.Apparently, China's stock market behavior is very irrational, external factors ultimately affectpeople's investment behavior through the inner psychological factors to. So, it is meaningful infact for the rising of investors earnings and market's rational progress, to analysis the irrationalbehavior on psychology part and to use the theory on the behavioral finance guide for investorsto invest rationally.Based on the elaborating of the theory of investment behavior in the finance, the articlefirstly introduces the development course and the present situation, proposed the irrationalbackground of the stock market, and sum up stock market investors'development status andcharacteristics; Secondly, the paper points out the expression of irrational behavior in the stockmarket, and discussed the source of irrational behavior. Any action is produced by thepsychological activity. This article talk about the cause of Irrational behavior mainly from thedeviation analysis that existing in investor, it also introduced outside factors'effect oninvestment behavior, and the adverse consequences on stock market development due toirrational behavior; Again, this paper make nonlinear regression testing to find if our China'sstock market exists typical the irrational behavior - flocks behavior, here is also innovative pointsin the paper. The authors choose300 sample stock data of Shenzhen and shanghai'recent years, so as to test the acuteness degree of herding behavior in stock market. The empirical researchshows that Chinese stock market has the irrational characteristics, there exists severe herdingbehavior in stock market only in 2008.From January 2007 to June 2010, there does not existsevere herding behavior, may been effected by selected data objects. Finally, according to theproblem exist in Chinese stock market, the paper put forward to some suggestions for eachmarket participants. Expounds, seriously, how could the individual investors rational investment,how to improve psychological quality of the investors.