The Impact Of Investor Sentiment On The Risk Of Stock Prices Plummeting

Compared with the stock price soaring,the stock price crashed is a common phenomenon.The stock price crashed would not only have a negative impact on the company,but also will damage the interests of investor,especially when investor confidence continue to reduce because of stocks collective slumping,even will endangers the stability of stock market and lead to economic crisis.On the one hand,because 90% volume of China's stock market are from retail investors,irrational behaviors,such as "herding",are particularly serious.In order to prevent financial risk,it is necessary to examine the link between this feature and stock price crash risk.On the other hand,there is information asymmetry and asymmetric competition in China's capital market,and the information transparency can alleviate this asymmetry problem,thus reducing the investor sentiment caused by the asymmetry problem.This provides a new way of thinking to solve the stock price crash risk caused by investor sentiment.Therefore,it is of great practical significance to study whether the transparency of the company's information can reduce the negative impact of investor sentiment on the stock price crash risk.First of all,the article reviews the related literature from home and abroad,and puts forward the corresponding theoretical analysis and hypothesis.On the basis of theoretical analysis,this article uses principal component analysis method to construct the market level investor sentiment index and uses the method of separating Tobin'Q value to construct company level investor sentiment index.Moreover,it takes 2008~2017 listed companies of our country as research sample and takes DUVOL and NCSKEW as measurement of the stock price crash risk,to study its impact on the stock price crash risk,and further studies on whether information transparency can or can't reduce the negative impact of investor sentiment on stock price crash risk.The conclusion shows that investor sentiment can significantly affect stock price crash risk of the listed company,and the higher the investor sentiment is,the higher the probabilityof stock price crash risk is.Furthermore,after controlling for other factors,the information transparency can significantly reduce positive relationship between the investor sentiment and stock price crash risk.The stock price crash risk is a malignant economic consequence that endangers the stability of the stock market and the development of the real economy.Stock price crash risk can be usefully reduced by investors participate rationally,and cooperations manage under the principle of honest and law,and authorities perfect the operation mechanism of the stock market.