Research On Investors' Herding Behavior And Its Market Influence In China's Securities Market

China's securities market fluctuates violently,the speculation phenomenon is obvious.There is not fully effective in the stock market.Due to reasons such as investment psychological deviation,the market often exists serious irrational behavior represented by herding behavior.Institutional investors which were widely believed to be rational investors are being questioned,wherever,individual investors are still struggling to make money in the market.From the arbitrage restrictions and investor psychology of behavioral finance,this article the theoretically analyzes the big three cause investors irrational herd behavior under the excessive market noise: information flow,reputation and compensation.Based on the institutional investors' trading data in Wind database and individual investors' trading data in a certain security company,this paper uses LSV models to test the investors' herding behavior and analyzes the influence of investor's herd behavior on the market with multiple linear regression models from 1st quarter of 2006 to 4st quarter of 2016 in China's securities market.The results indicate that the institutional investors show typical herd effect,like public funds,insurance companies,securities companies,social security funds and QFII.individual investors generally do not have significant herding behavior,only the individual investors of large money show significant herding behavior in certain years.The results also show the public funds' herding behavior is different in 1st,3rd quarters and 2nd,4th quarters,and the amplitude increases year by year.During the decade,institutional investors generally tended to hold blue-chips and industry leading stocks.The herd behavior of investors will obviously affect the stability of the market.The more severe the herd behavior,the higher the market volatility,the higher the yield and the greater the amplitude.After the analysis,the main reasons are as follows: the market noise is too big;the rational trading is blocked;Institutional imbalance of investors;Defects in the institutional mechanism of public funds;Investors' investment philosophy is highly consistent;Quality stocks are hard to find,and Investors are embracing a minority.Therefore,this article puts forward the following Suggestions.Firstly,regulators should diversify investors' structure.The second is to build a long-term evaluation mechanism of institutional investors.Third,the market should improve the information disclosure and reduce noise.Fourth,the market should focus on nurturing quality enterprises.Last,regulators should establish a system for protecting investorsespecially the interests of individual investors.