Empirical Study On Herd Behavior Of Investors In Crowdfunding Market

The development and progress of Internet technology constantly update the communication mode of information,and promote the emergence of new business models.Our country underthe background of economic transformation and deepening of financial reform,the traditional financial structure has been impacted and financial innovation has been constantly emerging.The crowdfunding,a representative innovative financing model in the Internet financial market,has been gaining popularity worldwide since Kickstarter,the first crowdfunding platform in the United States in 2009,was founded.Explosive growth makes it an important part of Internet finance.Thecrowdfunding was introduced into China in 2011,followed by a wave of "fundraiser" among Internet investors,with historically successful fundraising reaching 60 billion yuan.The crowdfunding are individuals or start-up companies use the Internet platform for their own creative project financing,some individuals holding idle funds to support the project and agreed to return,audit data and project financing behavior is to rely on the Internet platform.The project sponsor makes the project home page to introduce the project content and the future development plan,puts forward the project application in the crowdfunding platform,after the platform examination and approval,the project goes online.Investors decide whether or not to provide funds based on project information and personal preferences.In general,each crowdfunding project is completed by multiple investors.The crowdfunding model has relatively low participation threshold,low cost,convenience and group,and provides a new path for small and medium-sized enterprises facing financing difficulties,so as to get extensive attention of scholars.The open and transparent trading data of crowdfunding platform also provides an ideal window for studying investor behavior decision-making.For the crowdfunding market,the investor is an important participant in the financing process,and its behavior decision is the key to the success of the project.At present,the research of crowdfunding mainly focuses on the financing mechanism of crowdfunding,the influencing factors of project success rate and risk management,and the lack of investor behavior risk research.Relevant studies have proved that investors in traditional financial markets have remarkable herding behavior,but based on the similarity of the characteristics of investment behavior between Internet financial markets and traditional financial markets,as the representative field of Internet financial market,do investors in crowdfunding market also have herd behavior?If so,how does public information on the platform affect herd behavior?What kind of reference does the economic implications to the financial supervision institution and the participants in the crowdfunding market?Firstly,this paper briefly introduces the research background and reviews the research direction that scholars have paid attention to in the past.Combined with some new industry characteristics of crowdfunding compared with traditional financial market,this paper expounds the significance and innovation of this topic.Then,from two levels of systematic combing of crowdfunding and herding behavior related research literature,and then analyzed theshortcomings of the existing literature,this paper will be in the research content and research methods to make an appropriate supplement.The reasons for the formation of herding behavior in different market environments are also different.Through a brief introduction of the current situation of domestic crowdfunding industry and the performance of herd behavior of crowdfunding investors,the formation mechanism of herding behavior is analyzed from the angle of psychology and economics.Based on the following investment measure method and Bayesian probability,the hypothesis that herd behavior exists among crowdfunding investors is put forward.In the empirical part,the new supporters in T period are chosen as explained variables,and the accumulative number of supporters in earlier period as explanatory variable.The dynamic data of 104 complete surviving projects raised by JingDong are selected as the research samples.In order to ensure the robustness of the empirical results,we classify the samples according to the item type to test the existence of herding behavior,and examine the influence of direct and indirect information on herding behavior of crowdfunding.The five models are tested based on the panel data model,and the following conclusions are obtained:(1)There is a remarkable herd behavior among crowdfunding market investors.In this paper,the benchmark model is tested,and it is found that the cumulative number of supporters in the early stage has a remarkable positive impact on the number of new supporters.After the samples were divided into scientific and non-scientific categories according to the item type,the remarkable effect still existed,and then adding direct information variable and indirect information variable to test again,the effect of explanatory variable on explained variable remains unchanged.It verifies the hypothesis that investors in crowdfunding market have remarkable herding behavior.(2)Direct information can weaken the degree of herd behavior.The interaction coefficient between the cumulative number of supporters and the direct information is markedly negative,which means that when the current cumulative number of supporters is the same,the richer the direct information of the crowdfunding project is,the smaller the influence of the previous cumulative number of supporters on the investment probability of the later project investors.The detailed description of direct information can help reduce the asymmetry of information among the participants of the crowdfunding project,make investors understand the project more deeply,and make decisions on the project more rational.Therefore,the detailed representation of direct information will weaken herding behavior.(3)Indirect information to strengthen herd behavior.The coefficient of interaction between the cumulative number of supporters and indirect information is positive at a significant level of5%,which means that when the current cumulative number of supporters is the same,the more indirect information is available,the more likely the current cumulative number of supporters will be to encourage subsequent investors to invest.This shows that investors tend to accept indirect information with low search cost and time cost in order to mitigate the investment risk caused by asymmetric information.But indirect information contains many uncertain factors,which will further aggravate investors' blind behavior.The research and analysis of the empirical results show that raise public investors has obvious herd behavior,and strengthen the direct information disclosure is helpful to identify the merits of the project,reduce the degree of herd behavior,promote the rational decision-making of investors;indirect disclosure of information due to its authenticity and uncertainty has yet tobe verified,will aggravate the degree of herd behavior.Therefore,we can put forward some suggestions to improve the development of crowdfunding.This paper holds that on the one hand,the establishment of a standardized information disclosure system,the improvement of credit system construction,and the strengthening of investor education to reduce market noise,promote rational investment decisions of investors;on the other hand,it establishes the credit rating system of the industry and consummates the transfer mechanism of project exit in order to standardize the development of the industry and make the crowdfunding better serve the small and medium-sized enterprises.