Research On Manager’s Characteristics,Analysts Following And The Herd Behavior Of Corporate Investment

The item of Herd Behavior presents a phenomenon in which individuals take advantages of the information that used by most of people rather than his or her own private information to guide their decision-making process. The chain reaction after herd investment behavior will lead to the wasting of quantities of resources, which increase the risk of investment and hinder the normal development of enterprises, and will results in macroeconomic instability. Based on the data of Shanghai and Shenzhen A-share listed companies, this paper means to explore the existence of herd investment behavior of our companies. Then will do some further research about the effect of manager’s characteristics, analysts following and their interaction on the herd behavior of corporate investment. Then we will propose some countermeasures to mitigate corporate investment herd behavior.According to the current status of our domestic investment, this paper firstly reveals the phenomenon of our company’s herd behavior in investment. Under the support of theoretical literatures, we use t-test and regression testing method to investigate the existence of herd behavior in our corporate’s investment, from the industry level and enterprise level respectively. And then we employ the Upper Echelon Theory raised by Hambrick and Mason (1984) to discusses the effect of managers’characteristics on the herd behavior of company’s investment. Thirdly we explore the effect of analyst following on the herd behavior of company’s investment. Finally we do research on the relationship between the interaction of manager’s characters and analyst following and corporate’s herd behavior of investment.We come to the conclusion that when invest a project, our companies act as the herds. Also, results show that there underlies a positive relationship between manager’s age and the herd behavior. As to manager’s tenure and wage, the positive relationship also exists. But there’s a negative relationship between manager’s education level and herd behavior. Furthermore in case of other things being equal, followed by more analysts, the company tends to carry out more herd investments. Lastly, we find that though analysts’following exacerbates the promoting effect of manager’s age and tenure as well as the inhibiting effect of manager’s educational level, it still eases the positive correlation of manager’s wage level towards the herd behavior of investment.At the end of this paper, we put forward the corresponding countermeasures and suggestions according to the conclusions of this study.