An Empirical Analysis Of Investor Sentiment And Investment Behavior Of Listed Companies

Modern financial theory is based on the assumption of rational people, but in real life, people are not always rational, behavioral finance theory introduced the mental, emotional cognitive biases into capital market research, which have broaden the horizon of financial theory research. As an important branch of behavioral finance, the main contents that behavioral corporate finance theory studies is the impact of these irrational factors on the company financial management and decision-making. With the development of securities market, the impact of stock market for the company's business decisions is more and more significant, from the micro level, this impact is the stock price on the financial decisions. Irrational behavior of investors would make prices of the securities away from its intrinsic value in a certain period of time, appear securities "mispricing", this phenomenon known as investor sentiment.From the perspective of behavioral corporate finance and following the view of Catering Channel, this article will analyze the impact that investor sentiment on the investment level and investment efficiency. Based on sorting the previous study and theoretical analysis, this article presents four hypotheses to be tested, makes listed companies in China of A shares between 2006 and 2009 as the research sample and the sample according to certain criteria to be selected. This article selects lagged period momentum indicator (MOM) as a proxy to measure investor sentiment, introduces investment opportunities, the level of net worth, company size and assets-liabilities ratio into the model, and tests the relationship between investor sentiment and the investment level of listed companies. Through empirical study found that there was a significant positive correlation between investor sentiment and the level of investment in listed companies. In addition, this article uses the company investment efficiency estimated by model as the explained variable, the momentum indicators as the explanatory variables, introduces investment efficiency control variables, tests the relationship between investor sentiment and investment efficiency of listed companies, and then to investigate the economic consequences caused by investor sentiment. Empirical research found that there was a significant positive correlation between investor sentiment and overinvestment phenomenon of listed companies, and there was a significant negative correlation between investor sentiment and underinvestment phenomenon of listed companies. This result indicates that the impact of inventor sentiment on allocation of resource is not only a "Deterioration Effect' but also "Correction Effect", and this impact doses not necessarily lead to inefficiency in resource allocation.This article is divided into five parts:The first part is an introduction. This part points out the research background, and then reviews the studies that research how to define the concept of investor sentiment, how to measure investor sentiment and the studies research the impact investor sentiment on company investment behavior, analyze the domestic and foreign research situation. Then, on this basis, to define the starting point of this article and elaborate the research significance of this article;The second part is the related theories of investor sentiment and investment behavior. Firstly, author defines the related concepts and introduces causes of investor sentiment. Secondly, describes the related theories that investor sentiment affects the investment behavior of listed companies. Finally, presents empirical research hypothesis to be detected.The third part is the research design for empirical analysis. Firstly, explains the sample selection method and data sources. Secondly, selects the investor sentiment proxy variables. finally presents the models for empirical research;The fourth part is empirical testing and analysis. First of all, author gives the descriptive statistics of variables involved in the models, then, tests and analyzes whether investor sentiment affects the investment level of listed companies, whether investor sentiment affects the investment efficiency of listed companies, and whether well corporate governance of listed companies can reduce the inefficient investment behavior of listed companies respectively;The fifth part is the conclusions and recommendations. Firstly, author presents the conclusions of this research; secondly, author makes some recommendations against the problems found by empirical test.The innovation points of this paper mainly reflected in following two aspects: Firstly, novel research perspective. Through literature review author found that most of the previous studies discussed the impact of investor sentiment on investment behavior of listed companies are from the view of Equity Assurance Channel, and research method and content have been relatively mature, but studies based on Catering Channel are relatively little and need to be improved. Therefore, this paper take some sample selection method to exclude the impact that investor sentiment on investment behavior of companies through equity issuance channel, so we can comprehensive study this issue based on the point of Catering Channel more purely; Secondly, complete research system. Most of past studies focused on the relationship between investor sentiment and investment level of companies. But studies which discuss the impact that investor sentiment on the efficiency of resource are relatively few, and almost no studies research this two problems together. This paper based on existing literature, not only studies the relationship between investor sentiment and investment level of companies, but also examines and discusses the impact that investor sentiment on the investment efficiency of companies, not only focuses on whether investor sentiment affects the investment behavior of listed companies but also focuses on the economic consequence caused by this impact, forms a more complete research system.