Research On Peer Effect Of Investment Decisions In Listed Companies

At present,the investment behavior of enterprises often appears to be underinvested or overinvested in a certain period.This phenomenon is particularly obvious in our traditional manufacturing industries.Because the competition in modern society is becoming more and more intense.With the changing market demand,enterprises will fall in investment if they are not careful enough.So managers are likely to follow their peers' investment strategies in order to avoid risks under the pressure of competition.Based on this,this paper makes a further discussion on the investment behavior of enterprises from the perspective of peer effect.This article takes the Chinese listed company as the research objects and studies the peer effect by means of descriptive statistics,univariate analysis and multivariate regression analysis.First of all,this paper verifies the existence of peer effect in investment decision and then divides corporate investment into fixed asset investment and R&D investment to make the same studies.Also the the samples are divided into two sub-samples,investment increase and investment decrease,for further study.The influence mechanism of peer effect and its impact on corporate performance is also studied.Finally,the relationship between peer effect and manager power is introduced.The study found that:(1)The peer effect exists and the firm investment is only related to the investment of peer firms,but not affected by the non-peer firms;(2)The greater the degree of competition and the smaller the financing constraint,the more significant the peer effect is.At the same time,peer effect tends to occur in young companies and followers;(3)There is an inverted “U” relationship between peer effect and corporate performance;(4)The power of managers will promote peer effect and this influence is more significant in state-owned enterprises.The contribution of this paper is to add the neglected peer behaviors to the interaction between the market and the individual,and to carry out the research on the enterprise investment behavior from the perspective of decision psychology of managers.When identifying peer groups,analysts-based method is used which is different from previous researches.In the progress of empirical analysis,this paper does not only discuss the relationship between the firms and peer firms but also between the firms and non-peer firms,which further confirms the existence of peer effect.In addition,the research in this paper shows that it is important to pay attention to their peers and provide new solutions to alleviate social problems such as overcapacity.