The Impact Of Investor Sentiment To Listed Corporation Investment

The standard financial theory is based on "Hypothesis of Rational Man" and "Efficient Market Hypothesis", and thus forming many standard financial core theories, such as Trade-off Theory, Agency Theory, Signaling Theory and Capital Asset Pricing Model. However, periodic financial crisis had proved that investors are not entirely rational and the market is not is entirely efficiency. The standard financial theory has been unable to explain the anomalies of the market, such as the January effect, noise trading and the equity premium. Therefore, the behavioral finance has come into being; it relaxed the assumption of rational investors to study the anomalies in capital markets, and had achieved certain results.The capital market of China is as an emerging and transitional market, the institution is still far from perfect, market information is asymmetry, the investors lack investment experience and the ability to analyze information, which characteristic is that investors group are irrational, resulting in the prices of securities affected by investor sentiment is quite significant. Especially, since2008, the financial tsunami has exacerbated investor sentiment, more and more scholars observed that capital market existing investor irrational behavior, highlights the importance to the real economy. Moreover, the stock market price is closely related to the firm’s investment behavior. Therefore, studying the effect of investor sentiment to corporation investment behavior is helpful from the micro level to explain the macro issues.In this paper, it falls five parts to study the impact of investor sentiment to the investment behavior of listed companies in China. The main content is as follows:The first part is an introduction. The section includes the research background of this article, the theoretical and practical significance of the study of investor sentiment to corporation investment behavior, literature review, the basic framework of this paper, as well as innovation and inadequacy.The second part is the theoretical basis. Because study the impact of investor sentiment to corporation investment behavior is related to theories of psychology and finance, this section mainly analyze the relevant theoretical basis on behavioral finance point of viewThe third part is the research design. This part is the core part of this paper, including the sample selection and data sources, the proxy variable of investor sentiment-momentum index selection, the interpretation and definition of the assumptions and variables. The sample selection is based on the2006to2010, the Shanghai and Shenzhen A-share manufacturing data; investor sentiment indicators selected momentum index to measure; the model is based on previous studies and own views.The fourth part is the empirical testing and analysis. This section is mainly testing the related hypothesis, including variables descriptive statistics, correlation testing, regression analysis and robustness testing. On the basis of above obtain the test results; analyze and explain the corresponding results.The fifth part is the main conclusions and recommendations. On the basis of empirical testing and analysis, this section draws the conclusion and makes reasonable recommendations of the investment decisions of the listed companies in China.In this paper, the main conclusions of empirical research are as follows:(1) under the premise of rational managers, investor sentiment and the investment level have a significant positive correlation. Investor sentiment has a positive impact on the company’s investment, and it is also a driving force of the company investment behavior. Managers have the motivation to cater to investor sentiment in the company’s investment decisions.(2) Under the premise of rational managers, investor sentiment and the over-investment have a positive correlation; investor sentiment and the under-investment have a negative correlation, correlation. The impact of investor sentiment to corporation investment efficiency is both "deterioration effect" and "correction effect". If the "deterioration effect" is greater than the "correction effect", it will lead to non-efficiency of the investment; on the contrary, the company investment is efficient.(3) Under the premise of irrational managers, investor Sentiment and the managerial optimism have a significant positive correlation. The rising investor sentiment can shape the managerial optimism, and depressed investor sentiment will shape the managerial pessimism.(4) The mediating effect of managerial optimism makes the sensitivity that the impact of investor sentiment to the investment level enhances. Investor sentiment shaped the part of the managerial optimism to company investment level is significantly positive, and strengthens the sensitivity to the company investment level, also proved managerial emotion plays an intermediary effect.The innovation of this paper is:predecessors’studies about the impact of investor sentiment to corporation investment behavior built investor irrationality but managerial rationality or considered managerial irrationality separately. The literature about the both irrationality is fewer. These two emotions are not independent. Investor sentiment is not only a direct impact to company investment decisions, but also can indirectly affect the company investment decisions by shaping the managerial optimism. Whether a direct impact or indirect impact to corporation investment behavior cannot be ignored, this paper will break the previous studies, considered managerial irrational to study the impact of investor sentiment to the corporation investment behavior.