Will Investor Sentiment Affect The Company's R&D Investment?

"Capital market is not effective" has been widely recognized by the academic community.With the popularity of behavioral finance research,research on corporate investment behavior based on investor sentiment perspective has gradually become a new direction of modern enterprise investment theory.This paper focuses on the "research and development(R&D)investments" which has attracted more and more attention in the investment behavior of A-share listed companies in China and explores whether it will be affected by investor sentiment in the capital market and its deep mechanism of action.This paper takes the listed companies of China's Shanghai and Shenzhen A-shares from 2013 to 2017 as samples and obtains the basic conclusion that investor sentiment will positively affect the R&D investment level of enterprises.First of all,essentially speaking,the level of R&D investment of an enterprise is restricted by objective conditions- the monetary resources that the enterprise can allocate,which means whether there is sufficient financial support.Based on this basic logic,combined with the two viewpoints of "equity financing channel" and "debt financing channel" the author firstly conducts empirical tests between investor sentiment and R&D investment using the scale of equity financing and the debt financing separately as intermediary variables.The empirical results show that the scale of equity financing and debt financing,especially the scale of long-term debt financing,play partial intermediary roles in the process of investor sentiment positively affecting R&D investment,which proves the path of action "investor sentiment-financing scale-R&D investment" does exist.Secondly,in addition to objective financial constraints,the level of R&D investment of enterprises is also largely affected by the bias of the main decision-making body of R&D investment—executives of companies.But of course it is obvious that executives'decision-making bias is unlikely to be a fully decisive factor.As a result,we continue to conduct further research from the perspective of managers' self-interested motivation combining the view of "rationally catering channel" which is focused on the executives as well.Will the widely used method to solve the principal-agent problem-executive equity incentives enhance or weaken the positive correlation between investor sentiment and corporate R&D investment?This paper uses the executive shareholding ratio and the executive shareholding incentive intensity as indicators to measure the executive's equity incentives and concludes that the executive equity incentives will significantly weaken this positive correlation.Finally,we must note that for companies with different characteristics,the degree to which R&D investment is affected by investor sentiment,or in other words the sensitivity of R&D investment to investor sentiment is different.Therefore,I conduct an in-depth analysis from the perspective of moderate-factors "industry competition" and micro-factors"the nature of property".I find that the positive impact between investor sentiment and R&D investment is more obvious in high level of industry competition and non-state-owned enterprises.The above research has expanded and innovated a few on the basis of the existing theory,enriching the research on the influence and mechanism of investor sentiment and R&D investment level.From a macroscopic point of view,the conclusions of this paper help to remind policy makers to pay attention to the investor sentiment in the capital market and improve the reform process of China's capital market and banking industry.From a micro perspective,enterprises also need to remain vigilant to investor sentiment and set up a reasonable R&D investment decision-making mechanism to avoid the possibility that the rhythm of R&D investment is over-constrained by the irrational factors which is prevalent in the capital market.