Study On Chinese Stock Market And Behavioral Finance

Over the past few decades, there is an enormous discrepancy between what traditional standard financial theory says and what the real financial market goes on. Financial market bubbles, abnormal returns around specific events and recognized unreasonable financial time series patterns are observed everywhere and at almost every time period in the history. As a result,an emerging discipline, called behavioral finance, comes into researchers" eye to solve the questions mentioned above.Drawing on aspects of both psychology and finance, behavioral finance is founded on the premise that human beings are fundamentally irrational and motivated by unconscious cognitive biases.Those cognitive biases often prevent people from making rational decisions, despite their best efforts. This rationale offers a radically different view about the ways people and organizations really operate.This Thesis bases itself on the Behavioral Finance and makes analysis on investors’ psychology and investment patterns. Different types of marketfeatures on return and turnover are distinguished so as to recognize those stock patterns that are biased by the market. The returns on the observation period are measured to test the effectiveness of the market and the financial behaviors that are irrational.