| Traditional finance theory is on the basis of Modern Portfolio Theory (MPT) and Capital Asset Pricing Model (CAPM). Traditional finance theory is built on the "Rational Economic Man" hypothesis.but the traditional financial theory itself also flawed.irrational behavior of investors, non-random and efficient arbitrage and arbitrage, have decided not fully rational economic man.Since then the development of behavioral finance scholars began to make sense of and pay attention to the impact of that a series of psychological benefits of investors to their actual decision-making, which began a behavioral finance research and dissemination. Behavioral finance over the past decades has gained considerable development.Of which the noise trading theory has become an important part. The paper studies the impact of noise trading on the stock market.Based on Samuelson's (1958) life cycle model,De Long, Andrei Shleifer, Summers and Waldmann (1990) construct a simple noise trading model acting of survival by two types of people (DSSW model). In the model, the securities transactions generally can be divided into non-rational and rational trade, which is also known as noise traders.Although only limited rationality, it does mean that noise traders in the stock market have no living space. In some cases their revenue even exceed the reasonable level of return investors'. the more the better effect and the space to create beneficial effects will increase the noise trader expected return, whereas the price pressure effect and the buy low and sell high effect will reduce the expected benefits of noise traders. Therefore, under certain conditions, noise traders can benefit in the market, and their revenue are not necessarily lower than the rational traders. However, due to noise traders bear more risk so that they will be higher the probability of bankruptcy.Behavioral finance theory suggests that rational traders fear that the presence of noise traders may increase the risk arbitrage, and thus give up some of the risk of holding assets, while noise traders and thus to have access to a higher income. Therefore, noise traders may affect the stock market asset prices, there may even dominate the market in a period of time.For a better understanding of the sources and mechanisms of noise trading, we should analyze the specific types of noise trading. Views from the existing literature on the source of noise trading have been formally divided into three types of noise traders. These three were called information-based trading noise trading, agent-based model of noise trading and manipulation of noise trading and as guides of the factors and formation mechanism.After understanding the mechanism of noise trading, we take this research and analysis of Chinese stock market investors behavior. In this paper, investors of the structure, institutional investors control the behavior of stock prices, individual investor trading behavior and market behavior of short-term trading and other aspects of the behavior of investors in China stock market research and analysis features concluded that the development time since China's stock market, individual investors mature, rational level is not high, trading frequency; and large institutional investors in funds, with information superiority and the lack of appropriate supervision, but its stock price can be put on strong influence, and to profit from the stock price impact.The liquidity of the market must be produced by some of the noise trading, the stock market turnover as a liquidity measure, can be used as a measure of market trading levels of the primary indicators of the noise. High turnover and regional stock markets in developing countries is the case in developed countries compared with a distinctive feature. China's stock market liquidity ranks first in global securities markets, and this high turnover is no sign of slowing down. Excessive market liquidity, systemic risk is too high, which is China's stock market trading over the curved noise characteristics. This article also start from the turnover to study the phenomenon of noise trading in China's securities market.Institutional investors use their own advantage, intentionally trading on the stock price and trading volume behavior, is a stock market manipulation. Implementation process due to market manipulation, the manipulation of the different means used in the main, non-compliance level and the final impact on the market are different, the behavior can be described as the ever-changing, but this article to summarize the transactional market manipulation, market manipulation action type and three types of information disclosure. At this stage, the rapid development in China's stock market, and market manipulation means more diverse and complex realities of the case, should discover and identify the stock market manipulation, ready to take measures to curb stock market manipulation, reducing the stock on the stock market manipulation market risk.This article also make full use of statistical methods in China's individual investors the stock market as a whole composition, age structure, individual investor trading behavior and market behavior of short-term trading has done a detailed analysis. The results show that the Chinese stock market, individual investors and did not receive high school and high school education, the number of investors in the amount of the high side, and rational compared to developed countries, institutional investors are significantly less mature markets, the Chinese stock market investors to fund the investment structure is not reasonable. Some institutional investors on the stock market there is a certain degree of manipulation, and most individual investors attempting to profit from stock trading spreads; individual investors generally smaller scale, a small amount of funds, risk-resisting ability both relatively low, can not afford significant stock price fluctuations; individual investors are not concerned about the stock's long-term investment value, and generally focus on immediate interests, the Chinese stock market irrationality of individual investors trading behavior and market behavior of very short-term trading serious.Because the Chinese stock market, the low level of rationality of individual investors, institutional investors serious manipulation, information disclosure system is imperfect, and false information transmission phenomenon caused by the proliferation of noise trading, turnover is high. This article is divided into three types of noise trading range, mutatis mutandis, by contrast studies of the formation of China's stock market because of noise trading. Among them, the quality of information-based sources of noise trading can be divided into two reasons:one is the quality of the information itself, on the other hand is a noise trader information on how to deal with the problem. Agent-based transactions is due to the noise that exists between principal and agent investment capacity, ability to obtain information asymmetry, the agent in order to show their excellent ability to invest, to get the client trust the agent to get more money for the show their ability to have insider information or trading decisions. In order to manipulate the type of noise traders to manipulate stock prices making the initiatives of noise trading, or retail basis with the village of false information when carried out by all kinds of noise trading. The results from the noise trading perspective, institutional investors and making the process to initiate the manipulation of noise trading can be profitable; and ordinary individual investors with the village because of the blind and passive noise trading is carried out by the end result of their investment losses.As for the noise traders and viability of the living environment, individual investors are noise traders in the lasting viability of not available, in accordance with the survival of the fittest rules the jungle, eventually they will be expelled from the market. And investors will happen eventually significant structural changes, the market will eventually develop into developed countries, access to the main game in the era of investment institutions, the sources of noise trading must be observed with the situation now exists significant difference. But at this stage, China's securities market is still in the early stages of development, market size is still in the growing phase, there is a huge incremental funding outside into the potential investor base is also still in the process of continuous growth, so in the current noise traders, or have a space for survival and viability.China's securities market after this issue provides an overview of noise trading, noise trading that China's stock market problems more serious compared to many developed countries, securities markets, pointing out that as the market continued reform and development, China's stock market will end up with the developed State institutions in mature markets like the game entered the stage, at that time will significantly improve the noise and reduce the transaction.Finally, according to the results of this study, in combination with the actual situation of China's securities market, the corresponding policy recommendations, primarily to strengthen legislation and government oversight, and increase the cultivation of rational market players, improve the transparency of information disclosure to reduce information acquisition costs, plus large financial derivative product development and sales efforts, and after prior audit supervision combined. |
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