Economic Policy Uncertainty,Investor Sentiment And Stock Yields

The report of the 20th National Congress pointed out that China’s economy is currently affected by the epidemic and the complex and changeable external environment,and the internal and external uncertainties facing economic development have increased.The government will formulate a series of economic stabilization policies to rebuild the confidence of economic market players.With the formulation and promulgation of a series of economic policies,the uncertainty of economic policies faced by China will also increase,which on the one hand will affect the judgment of enterprise operators on the macroeconomic form,and to a certain extent,affect the company’s stock.On the other hand,it will improve investors’ risk perception and amplify the impact through the herd effect,causing a large change in the company’s stock yield.The report also highlighted the important role of the stock market in serving the real economy.However,at present,China’s stock market is not perfect enough and is more easily affected by economic policies.Therefore,in the context of the current economic development instability,it is of certain significance to pay attention to the impact of economic policy uncertainty on China’s stock market,as well as the impact of investor sentiment on the stock market in this special period.This article sorts out and summarizes the relevant literature,and then completes the theoretical analysis based on the theoretical basis and puts forward research hypotheses on this basis.This paper takes the quarterly panel data of A-share listed companies in Shanghai from2010 to 2022 as a research sample,and finally obtains 57908 observations after removing some data,and uses a fixed-effect model to test the impact of economic policy uncertainty on stock returns and the mechanism of investor sentiment.After completing the regression test and soundness test,the impact of economic policy uncertainty and investor sentiment on stock returns under different company sizes and different economic periods is further studied.The above findings find that,first,rising economic policy uncertainty will lead to a significant decrease in stock yields;Second,investor sentiment showed a significant positive correlation with stock returns;Third,investor sentiment has a certain mechanism in the impact of economic policy uncertainty on stock returns.Fourth,the robustness test results show that the correlation coefficient between lagging economic policy uncertainty and stock yield is stronger,indicating that the impact of economic policy uncertainty on stock yield has a certain time lag,while the correlation coefficient between investor sentiment and stock yield is stronger in the current period than in the lag period;Fifth,the results of the group test in further studies show that larger companies are more affected by economic policy uncertainty and investor sentiment.Economic policy uncertainty is a stronger constraint on stock yields in times of economic instability.Finally,based on the above conclusions,the policy recommendations of this paper are proposed.First,the government should pay attention to the impact of economic policy formulation on the stock market and investor sentiment,and enhance the sustainability of economic policy.Second,the government and relevant institutions should focus on improving the professionalism of investment entities and reducing the occurrence of irrational investment behavior.Finally,improve policy interpretation and information disclosure to reduce the impact of ambiguous information on investment entities.