Research On The Behavioral Financial Theory And Which Is Applied In Corporate Investment

The modern finance theories are based on efficient market hypothesis and capital asset pricing theory. They can only make use of optimization decision models to explain what the best decision is. Meanwhile they are not able to probe into investors'practical decision procedures by descriptive decision model. Behavioral finance theories are raised in the questions and challenges to the efficient market hypothesis. Behavioral finance theories are based on psychology and behavioral economics. Human behavior model is built on a more realistic basis. Behavioral finance theories research the psychological characteristics, such as cognition, emotion and attitude, in the process of investment decisions, and inefficiency caused by them.The research on behavioral finance of our country is still stated in the stage in start. Most of existing studies focus on summaries of behavioral finance theories and the explanation of unusual phenomena in securities market with these theories, which are seldom applied in corporate investment decisions.Based on the research on behavioral finance theories both in our country and foreign countries, this article introduces the existing architecture of behavioral finance theories systematically, analyze the difference between the behavioral finance theories and traditional finance theories. Then combining with psychology, behavior and other content, behavioral finance theories are focused on analysis appliance of behavioral finance theories in the corporate investment decisions. The appropriate strategy is put forward to provide theoretical and practical guidance for corporate investment decisions.Through behavioral finance theories research literature synthesis, this article design specifical research methods and content of this arrangement. First of all, this article introduces the basic contents of traditional finance theories and the problems being faced. And then the query of behavioral finance theories about efficient market hypothesis is introduced. Further the two major theoretical foundations and basic contents of behavioral finance theories are elaborated. The theoretical foundations embrace psychology and prospect theory, and the basic contents covering behavioral asset pricing model and behaviora1 portfolio theory. Finally, this article discusses the application of behavioral finance theories in investment decesion from four aspects such as Overconfidence, sunk costs and regret .Investment advices for overconfident investors are given basing on the analysis of the impact factors and characteristics of overconfidence and relationships between it and the market environment. Countermeasures for sunk cost effects are given by analysing the formation factors and rational function of sunk cost. Based on analysing the psychological mechanism, the paper discusses impact of regret on decision. Emotion adjustment strategy of regret are proposed.