Research On The Peer Effect In Over-investment Of Listed Enterprises In China

In recent years,the following investment and gathering investment behaviors in companies happen all the time.The industry investment in photovoltaic power,shared bikes,and smart cars has been popular once in a while,which attracts a large number of enterprises.The following investment brings over-investment and overcapacity in the entire industry.This not only led to the capital chain rupture and tragic ending of some enterprises,but also brought potential financial risk.This phenomenon has aroused the widespread concern of scholars at home and abroad.Traditional corporate finance theories mainly explain over-investment behaviors in terms of information asymmetry,agency costs,and managerial overconfidence.These theories are based on the assumption of independent decision-making by enterprises,and rarely consider that over-investment behaviors are affected by peer corporate behaviors.Therefore,when most peer companies adopt over-investment decisions,the company tends to do that too.This phenomenon is called the peer effect.The peer effect of corporate over-investment decisions many comes from two aspects:first one is irrational factors.In an uncertain environment,corporate managers may lack self-confidence due to their insecurity,so they are more likely to imitate group decisions to obtain a sense of security;the second is rational factors,mainly including learning motivation and competitive motivation.Companies will choose to follow some successful or more mature companies,and refer to their situation,learning their experience,and imitate their decisions to help reduce uncertainty or reduce decision costs.At the same time,the competition in enterprises also strengthened the peer effect.Enterprises always pay attention to the situation of their competitors.Some enterprises even suppress other competing companies by expanding their investment scale,blindly constructing and other ways that exceed their real investment needs,thus resulting in companies are competing to expand their investment scale to seize the market.Therefore,the peer effect is a nonnegligible factor when studying the over-investment issue of enterprises.Based on this perspective,this article attempts to introduce the peer effect into the study of over-investment and analyzes the over-investment phenomenon of Chinese listed companies from the perspective of peer effect.First,establish a theoretical analysis framework for the over-investment peer effect phenomenon based on the relevant theories of finance,behavioral economics,and sociology;Then based on the theoretical analysis framework,a research model of corporate over-investment in peer effect is constructed.This article takes 3017 Shanghai and Shenzhen A-share listed companies in 18 industries from 2003 to 2018 as a research sample,and takes other listed companies in the same industry and the same province as their peer companies,separately investigate and analyze the industry peer effect and regional peer effect of enterprises' over-investment behavior.Finally,this article study the influencing factors of listed companies' over-investment behavior from the perspective of peer effect based on the theoretical analysis and empirical,and give policy suggestions.The main research conclusions of this paper show that:First,there is a significant industry peer effect of over-investment behavior in listed companies.Whether and how an enterprise over-invests are positively correlated with the proportion of over-invested companies in the industry and the over-investment index;Secondly,there is a significant regional peer effect of over-investment behavior in listed companies.Whether and how an enterprise over-invests are positively correlated with the proportion of over-invested companies in the region and the over-investment index;Third,financing constraints and environmental uncertainty have a significant impact on the peer effect of over-investment.Financing constraints strengthen the peer effect of enterprises' over-investment,while environmental uncertainty impair the peer effect of enterprises' over-investment;Fourth,industry competition and financial deepening have a significant impact on the peer effect of over-investment.Industry competition strengthens the industry peer effect of enterprises' over-investment,while financial deepening impair the regional peer effect of enterprises' over-investment.