The Relationship Between Market Development,Investor Sentiment And Over-investment Of Listed Companies In China

China's overheating economic growth eased slightly after the 2008 economic crisis,but the rank of its economic growth is still among the top of the world.Such a high growth rate is mainly due to the high proportion of investment each year in China.While the effect of investment on the economy is so big and lots of resources are occupied,the efficiency of investment looks not satisfied in our country.More than half of our investment turned into the fixed asset investment,and only a small proportion turned into consumption.Despite government investment,the investment efficiency of the listed companies is a hot topic in academic area.The over-investment not only is a waste of resources,but also it has a negative effect on the sustained growth of the Chinese economy.What affects the investment of the listed companies,and what promotes them to choose over-investment?How to improve the investment efficiency of the listed companies and reduce these irrational moves?These two problems are also the main focus in this thesis.Previous literature is primarily focusing on internal factors such as corporate cash flows or equity structure of the listed companies,and their influence on the efficiency of investment.But in this thesis it is found that there is a different and more macroscopic approach to understand the underlying cause.We examine the behavior of the listed companies' over-investment from two aspects,one is the capital market and the other is the real economy.We use China's 2006-2014 non-financial listed companies as a sample to study how the process of our market and investor sentiment which stands for the real economy and the capital market separately can affect the inefficient investment behavior of the listed enterprises in our country,especially the influence of excessive investment.Based on the empirical analysis,it is found that the higher the degree of marketization which means the real market is more mature,the less of excessive investment behavior of the listed companies.More evidences imply that investor sentiments also have certain effect on the over-investment of the listed companies.The greater the misjudgment of investors in capital markets,the more likely the over-investment behavior.The findings of this thesis have profound meanings for us to understand how the real market and the capital market influence companies' investment behaviors.We introduce a marketization index as the research object for us to have a deeper understanding of the excessive investment behavior of the listed companies.Our results also have important policy implications on how to guide the investment of the listed companies more efficiently on the macro level and what environment the government policy can create which is suitable for the development of the enterprises.