| Traditional financial theory is based on the hypothesis of rational man. However, the actual situation is not the case. Managers’ investment often deviates from the rational decision, such as excessive investment, inadequate investment, blind merger and acquisition. In addition to lots of objective factors such as the separation of ownership and managerial authority and the difficulty of monitoring the external scattered equity, managers’ psychological factors including overconfidence and herd behavior will also have a significant impact to the investment decisions. Behavioral corporate finance theory considers the behavior factor on the basis of the traditional financial theory, which holds the opinion that the ineffectiveness of market and irrational of internal managers influence the company’s financial decision and value. In the process of seeking to maximize the value, enterprise will exist "behavior cost", which directly leads to the low efficiency of behavior and damages to the enterprise value.As a decision-making model in the financial markets, herd behavior’s reasons and economic effects form the basis content of behavioral corporate finance theory, which is widely researched by western scholars. The efficiency and effectiveness of government’s economic intervention decide the differences of macro environment between China and foreign. Industrial policy under the background of special system in China can efficiently allocate resources and balance the industrial situation. The differences of China’s and foreign country’s macro environment lead to listed companies’ different investment behavior. So this article is based on the industrial policy perspective to study the reasons and economic effects of herd behavior. This paper contains the following five sections:The first part is an introduction, which outlines the background and significance of this topic, makes literature review and comment from the definition, reasons and impacts on the enterprise value, and finally puts forward ideas, methods and innovations.The second part is related theories and hypotheses. Based on transaction cost theory, principal-agent theory, behavioral finance theory and behavioral corporate finance theory, the thesis analyzes how information cost and reputation managers result in herd behavior and inefficient investment, finally affect the enterprise value. Put forward the hypotheses of the relation between the information cost, fame and herd behavior, the relation between herd behavior and enterprise value.The third part is the empirical research design which determines the study sample, selects the study variables and designs the models according the hypotheses.The fourth part is the empirical test and analysis results, including the relation between information cost, reputation and herd behavior; the relation between herd behavior and enterprise value based on industrial policy.The fifth part is the summary and recommendations which summarizes the conclusions according the empirical results, makes suggestions, and points out the inadequacies of this paper.Through theoretical analysis and empirical test, this paper draw the conclusion: information cost and reputation concerns are herd behavior motivation; Regardless of the industrial policy, herd behavior can reduce the enterprise value; Consider industrial policy, the guidance of industrial policies reduces the degree of damage which managers’herd behavior make to the enterprise value.The innovations of this paper lie in the following three points:Firstly, systematically study herd behavior’s reasons and economic impact on the enterprise; Secondly, quantify factors to test herd behavior causes from the perspective of empirical; Finally, give full consideration to the special system under the background of macroeconomic factors-industrial policy. |
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