A Study On The Peer Effects In Investment Decisions Of Chinese Listed Corporations

As one of the most important financial decisions of modern companies,investment decisions affect companies’ profitability and growth,and play a critical role in the value of the company.Therefore,it is particularly important for companies to make scientific and rational investment decisions.When analyzing corporate behavior,traditional investment theories often regard them as isolated and homogeneous individuals,yet ignore the possible strategic interaction among firms.With the advancement of research on the peer effects in sociology and the rise of modern emerging disciplines such as behavioral finance,peer effects have provided a new research direction and thinking for companies’ investment decision-making.Under this framework,companies’ decision-making behaviors are affected by the external competitors.Based on this perspective,taking the financial data of 2704 listed companies covering 15 industries from 2001 to 2015 as samples,this paper investigates peer effects during the process of companies’ investment decision-making and measures the economic effects of peer effects by using output efficiency to furthermore explore the wisdom of decision-making in corporate investment behavior.This paper found that,(1)There is a significant peer effects in the company’s investment decisions,which is represented by the mimicry of industry investment decisions and the learning of industry specific information,in addition,mimicry behavior is the fundamental cause of investment expansion,learning behavior has weakening effect;(2)The overall output efficiency of listed companies in China is 55.2%,under the influence of peer effects,the output efficiency is increased to 55.8%-56.7%;(3)Over-investment behavior reduces the output efficiency,under peer effects,mimicry behavior amplifies the negative impact,while learning behavior mitigates the effect.