External Governance?Management Irrational Mentality And Investment Behavior Alienation

Investment is a key driver in promoting economic growth.The Thirteenth National Economic and Social Development Plan for Five Years(Five Years Plan in short)has pointed out that to better exert the power of investment in promoting economic growth.Statistics from 2015 Chinese Enterprises 500 has shown that high investment rate and low rate of return have been the current problems of the enterprises in China.How to effectively stimulate investment properly is the key issue of the Five Year Plan.Corporate investment is mainly the result of management investment decision-making,which is the result of the rationality of management decision-making.However,in reality managers are not perfect rational,their behavior are affected by explicit qualities such as age,gender and so on as well as implicit psychological characteristics.These factors all compound and lead to many phenomenon that can't explained by traditional theory,for example,disposition effect,announcement-based effect.To seek answers to them,many scholars tried to put psychology,the science of human behavior into the study of economics,finance and management.These attempts have resulted in new types of theory: behavioral finance,behavioral economics,which give the phenomenon unexplained a nearly perfect explanation.The study of the factors affecting management behavior is an important branch of the modern finance theory.In addition to the effect of management qualities,the management behavior is also affected by the internal and external factors of corporate governance.The external corporate governance is the base stone of the internal corporate governance and is an important part of the corporate governance system(Yifu Lin,1997).At the time of the transformation of China's economy,external corporate governance factors have changed and some factors that have been ignored are affecting the company to a greater extent.Network media,fund and system of law have become more important,also the focus of the article—with the prevalence of the mobile internet,the information source of the management has changed from the paper media to network media;With the pension funds have entering the stock market,institutional investors have become the main investors on the stock market;With judicial reform been a key social reform,legal system has played more and more a key role in corporate governance.What effect will all these new factors have on the management investmentbehavior? Based on the special institutional background of China,property right is a key trait of a company,what effect will it have on the process above? With these questions,this article put network media,funds and legal system into a framework in a systematic way.Based on the data collected from the listed companies on the Shanghai and Shenzhen stock market,this article constructs a mediating effect model with moderating effect.This model tries to study how the three external corporate governance factors affect management behavior through management irrational mentality,and how the property right moderate management behavior.First,this article clarifies core concepts and analyse corporate governance theory and behavioral finance theory,the mediation effect and moderation effect.Based on these,this article put forward the assumptions and examine them using empirical test.This article has the following new points:(1)The innovation of research models:put many governance factors into one model and construct a mediation model with moderation effect;(2)The innovation of research perspective: extend the current perspective of internal governance to external governance;(3)The innovation of research method: to use fair value to measure the irrational psychology of managers.The article reaches the following conclusions:(1)External governance factors has direct effect on the extent of management investment behavior alienation;(2)Management irrational mentality has mediation effect on the course of external governance factors affecting management investment behavior alienation;(3)In overall sample,the effect of positive media reports on management comply with the principle of “win and be conservative” not “win and be aggressive”;(4)In undercapitalized and overcapitalized companies,the effect of positive media reports on management comply with the principle of “win and be conservative”not “win and be aggressive”;(5)In undercapitalized companies,the effect of positive media reports on management comply with the principle of “lose and be conservative” not “lose and be aggressive”;(6)In undercapitalized and overcapitalized companies,the effect of positive media reports on management comply with the principle of “lose and be aggressive”not “lose and be conservative”;(7)Property rights plays the role of moderation on the course of institutional investors' role on the management investment behavior,and such role is the result of the trade-off of interest of the management;Property rights plays an insignificant role on the course of legal systems' role on the management investment behavior.(8)Though perfect legal environment have no significant effect on the investment behavior of management,it still can stimulate management investment but can not suppress over-investment of managers.Based on the theories above,this article puts forward suggestions in terms of policy making and management behavior.The study of the article clarifies the mechanism of the roles three external corporate governance factors play on the management investment behavior and put forwards suggestions concerning policy making and management behavior.