Effect Of The Investor Sentiment On The Stock Returns Based On The Environment Change

Behavioral Finance theory believes that the change of investor sentiment affects stock returns,and investor sentiment is a systemic factor affecting stock returns.The change of investors sentiment influent the change of decision made by the investors,the change of decision influent the change of stock returns.As the behavioral finance theory developments,people have funded many factors affecting investors sentiment,including the environment change.Today,missing concept of environmental protection result in air pollution in big cities.Enviroment affects investorssentiment,thereby affecting their investment decisions.Many researchers have proved that environmental changes will affect stock returns by affect investor sentiment,but many researches focus on the relationship between environmental change and the overall stock market returns,this paper not only focus on the effect of overall stock market returns,but also focus on the cross-section effect of environment on the stock returns.The paper is divided into five parts:First one is a brief introduction.The second and The third focus on the literature review and propose hypotheses.The fourth part is empirical part.The last one is a summary of the article.This paper come to the conclusion that environment change affects group stock returns based on PE ratio and industry.Environment change has little relation with the overall group stock returns.