| With the arrival of the “new normal”,the economic development mode of excessive dependence on factor input is no longer sustainable.At the same time,due to setbacks in economic globalization,China’s international trade and overseas investment face more tremendous obstacles and more difficulties,which seriously affect the implementation of China’s “go global” strategy.China faces the dual challenges of domestic industrial upgrading and international trade and investment barriers.In this period,improving the total factor productivity(TFP)of enterprises and promoting domestic enterprises to “go global” is crucial to achieving high-quality economic development and enhancing global influence.The improvement of TFP stems from technological progress,which cannot be separated from the support of financial resources.At the same time,enterprises’ outward foreign direct investment(OFDI)is based on higher productivity and is closely related to the external financial environment.Therefore,investor sentiment,TFP and OFDI are closely related.The Chinese government has proposed to “increase the proportion of direct financing,especially equity financing.” However,the main body of China’s capital supply is still the indirect financing system,with state-owned banks as the main body.Most residents also prefer bank savings and real estate investments.Increasing the proportion of direct financing depends on the confidence and enthusiasm of most residents and institutional investors in developing the capital market,which is directly reflected in investor sentiment.Based on the practical background of China,this paper brings investor sentiment,firm TFP and OFDI decision into the same analytical framework.Based on the bounded rationality theory,the principal-agent theory,and the endogenous growth theory,this paper analyzes the internal logic of investor sentiment affecting firm TFP and OFDI decision and makes an empirical examination using A-share listed company.The main contents of this paper include:(1)The impact of investor sentiment on firm TFP and its transmission mechanism and boundary conditions;(2)The impact of investor sentiment on the OFDI flow and its transmission mechanism and boundary conditions;(3)The impact of investor sentiment on the OFDI establishment mode and its transmission mechanism and boundary conditions.The main conclusions of this paper are as follows:(1)High investor sentiment has a positive impact on firm TFP by promoting enterprise innovation and improving resource allocation efficiency.This positive effect is more pronounced in firms with lower agency costs,higher internal control quality,and non-state-owned enterprises(non-SOEs).This positive effect is more pronounced when the economic growth rate drops,monetary policy tightens,and economic policy uncertainty is increased.(2)High investor sentiment has a significant positive impact on the OFDI flow by impacting the TFP of firms.In addition to the TFP,the market-timing and catering effects are also essential transmission mechanisms.The impact of investor sentiment on the OFDI flow has no significant difference between SOEs and non-SOEs.However,it is more pronounced in firms located in the central and western provinces.Whether for technology-intensive industries or non technology-intensive industries,high investor sentiment has a significant role in promoting the OFDI flow,and this role has no significant difference between technology-intensive and non-technology-intensive industries.Business cycle,monetary policy,and economic policy uncertainty have no significant impact on the relationship between investor sentiment and OFDI flow of firms.(3)Investor sentiment impacts the choice of the OFDI establishment mode of firms,and high investor sentiment has prompted firms to choose cross-border M&A rather than greenfield investment.This impact is concentrated in non-SOEs,and is more pronounced in firms located in the central and western provinces and the technology-intensive OFDI projects.Business cycle,monetary policy,and economic policy uncertainty have no significant impact on the relationship between investor sentiment and the OFDI establishment mode of firm.This paper makes the following contributions:(1)It enriches the research on the economic consequences of investor sentiment from the perspective of firms’ internationalization.The previous literature on the impact of corporate investment decisions mainly focused on corporate overall investment or R&D investment,and the research on investor sentiment’s impact on corporate internationalization is relatively lacking.This paper studies the effect of investor sentiment on firms’ OFDI decisions which enriches the literature about the economic consequences of investor sentiment.(2)It enriches the theoretical analysis framework of investor sentiment in the stock market and OFDI decisions of firms.Based on existing relevant research,this paper extends the measurement of OFDI from cross-border acquisitions to all OFDI activities,including greenfield investment.It also incorporates the establishment mode of OFDI into the scope of research.We obtain a clean irrational component of investors through the stock mispricing model and examine investor sentiment’s impact on the overall OFDI and its establishment mode,thus enhancing the breadth of relevant research.This paper also reveals the role of TFP channels and managers’ catering motivation through China,an emerging market sample,and strengthens the depth of relevant research.(3)Based on the Chinese context,this paper expands the research on the economic consequences of irrational factors in the capital market from the perspective of corporate TFP and also expands the research on the determinants of corporate TFP from the perspective of irrational factors in the stock market.Although previous studies have examined the impact of investor sentiment on corporate R&D and innovation,considering that its impact on corporate R&D and innovation may not be transmitted to corporate TFP or there are other transmission channels,the impact of investor sentiment on corporate TFP remains to be examined.This paper supplements this literature gap through empirical research. |
