Research On Impacts Of The Investor Sentiment On Enterprise Investment Behavior

Investment decisions of listed companies is an important part of the companies' financing decisions, determine the enterprise's operations and prospects. In the traditional theory of corporate finance, corporate investment decisions are made based on fundamental value of the company, but with the rise of China's capital market, listed companies show a preference for equity financing, so that the stock price volatility in the capital market affect the corporate investment behavior. However, stock price is affected by irrational factors caused by acknowledge and behavioral deviance of the investors, which is widespread considered as investor's sentiment. The irrational investor's sentiment tends to make the stock price deviate from its fundamental value, and affect managers to make investment decisions, thereby investor's sentiment constrains the enterprises'development. In addition, economic literature and theoretical logic have proved that the irrational effect is systemic, and may have a significant impact on corporate investment behavior.In the above context, we use the theory of behavioral finance in Chinese special environment. Firstly, this article reviews the domestic and foreign literature. Then we establish the theoretical model of corporate investment behavior based on the investor's sentiment perspective, discuss the change of corporate investment behavior. Finally, this paper empirically analyzes the influences of investor's sentiment on corporate investment behavior with panel data of listed companies in Shanghai and Shenzhen stock market between 2006 and 2009. Furthermore, this paper uses turnover rate as the proxy variable of the investors'sentiment, and controls the value of Tobin's Q, leverage, operating cash flows, firm size and other factors on corporate investment behavior. The results show that investors' sentiment and corporate investment behavior has a positive correlation. In conclusions, this paper will undoubtedly provide a theoretical basis and practical value to optimize the corporate structure.