Investor Sentiment And Firm Inefficient Investment

With the special environment of China’s capital market and the institutional background of equity concentration, researching the influence of investor sentiment on the non-efficiency investment under the regulating effect of ownership characteristics, it is helpful to explore the influence of the fluctuation of capital market sentiment on enterprises investment efficiency from the perspective of micro enterprises. The research can provide the theory reference and support for rational investment and improve the investment efficiency of enterprises.Firstly, this article from three aspects to review relevant literature, they are contain the measure of investor sentiment, the mechanism and economic consequences of investor sentiment influences enterprise investment. We put forward the breakthrough point on the basis of literature review. Secondly, we propose the research hypothesis based on theoretical analysis. Then we make a research decision for this article. Thirdly, based on the data of China’s listed companies which issued A shares in Shanghai and Shenzhen stock markets from 2004 to 2014, we use panel data regression model to analyze the impact of investor sentiment on the non-efficiency investment and the impact’s difference due to different ownership characteristics, such as controlling shareholder’s stake, equity restriction ratio, the nature of actual controller and separation of two rights. The moderating effect was identified by using grouping regression method. The empirical results show that, investor sentiment is positively related to over investment, and it is significantly negative correlation with under investment. Further research findings that:(1) No matter how much the proportion of controlling shareholders’equity, investor sentiment is positively related to over investment while negatively related to under investment. And when the proportion of controlling shareholders equity is lower, it is more willing to cater to investor sentiment;(2) The higher the degree of equity checks and balances, the more obvious that the investor sentiment is the "fuelling effect" of the over investment and the more powerful the "mitigation effect" of the investment problem; The higher the degree of equity checks and balances, the more obvious that the fuelling effect of investor sentiment on the over investment is, the stronger that the mitigation effect of investor sentiment on the under investment is;(3) Compared with the state-owned enterprises, private enterprises have a stronger tendency to cater to investor sentiment; (4) Separation of two rights enterprises are more willing to cater to investor sentiment. Two rights of enterprises separation or not both will cater to investor sentiment to alleviate inadequate investment, but the "mitigation effect" is more remarkable for enterprises whose two rights are separation.Finally, we make a research conclusion of this article and put forward some policy advices, such as improving the capital market environment, strengthening the education of investors, guiding investors to make rational investment, perfecting the measure of the management performance and improving the investment efficiency of enterprises. Then, this article put forwards the relevant issues of the future research direction on the basis of the conclusion.