Analysis Of The Influence Of Investor Sentiment On Equity Financing Cost

Equity financing cost is an important part of enterprise management,and its size is directly related to the financing and business decisions of the enterprise.At present,most of the literature on the factors affecting the cost of equity financing is based on the two assumptions of “market is completely effective” and “investor rationality”,while behavioral finance tells us that the market is not completely effective,and it is difficult for investors to be completely rational.As one of the important pillars of behavioral finance,investor sentiment has little research on the impact of investor sentiment on corporate equity financing costs.Therefore,based on the theory of behavioral finance and the theory of information asymmetry,this paper relaxes the assumptions of “all-effective market” and “rational investors”.Taking the monthly data of Shanghai-Shenzhen A-share listed companies in 2014-2017 as a sample,I borrowed Yi Zhigao.And Mao Ning(2008)index construction method,and added the turnover rate indicator,using the principal component analysis method to obtain the investor sentiment index,and innovating on the basis of the CAPM model,the actual equity financing cost and the theoretical equity financing cost Poor,get the non-theoretical part of the cost of equity financing.After controlling other factors,the method of multiple linear regression is used to empirically test the relationship between investor sentiment and corporate equity financing cost.In addition,according to certain case screening rules,this paper selects the private placement of China Tianzhu Co.,Ltd.as a case study to confirm the results of the analysis.Finally,recommendations are made for investors,business managers,and market regulators.The conclusions of this paper are as follows:There is a significant negative correlation between investor sentiment and corporate equity financing costs.When investor sentiment rises,the cost of equity financing will decrease,and this relationship will decrease as the maturity of the listed company’s sector increases.Therefore,rational business managers will judge the trend of investor sentiment,choose appropriate financing opportunities to control the cost of equity financing of enterprises,and maximize the financing efficiency of enterprises.