Research On Internal Control,Investor Sentiment And Corporate Investment

Enterprise investment is affected by both managers' decisions and the external market environment.Whether an enterprise can achieve optimal decisions determines the quality of long-term development and the operation of the real economy.In reality,investor sentiment is widespread due to factors such as information asymmetry in the external market,principal-agent,etc.This irrational investor sentiment not only leads to mispricing of the stock market,but also infects corporate managers,which in turn affects corporate investment decisions,and leads to inefficient investment behavior and investment time preference that deviates from optimal investment.The internal control system aims to break the information barriers and weaken the principal-agent problem through compulsory disclosure,which helps reduce the degree of information asymmetry between investors and companies,supervise and inhibit management's irrational behavior,and stabilizes investor sentiment,which in turn has an impact on the future investment behavior of the enterprise,and avoids inefficient and short-term and long-term fluctuations in corporate investment.This paper based on the principal-agent theory,information asymmetry theory and emotional infection theory,to study whether internal control can suppress the adverse effects of investor sentiment on corporate investment as a moderator.This paper uses the data of all A-share listed companies on the Shanghai and Shenzhen markets in China from 2010 to 2018 as the research sample,uses the semi-annual momentum indicator as a substitute for investor sentiment,and use DIB's internal control index as an indicator of internal control,the research is conducted from the perspective of long-term and short-term investment and whether the investment is efficient.First,the investment is divided into short-term investment and long-term investment according to the investment time limit of the enterprise,and multi-element investment is established.The linear regression model examines the impact of investor sentiment on long-term and short-term investment in enterprises,and then introduces internal control variables and the interaction terms between internal control and investor sentiment to test the moderating effect of internal control on the relationship between investor sentiment and long-term and short-term investment.Secondly,from the perspective of the inefficient investment behavior of the company,using Richardson's expected investment model residuals to measure the inefficient investment behavior of the company,and then constructing a multiple linear regression model to test the impact of investor sentiment on the over-and under-investment of the enterprise.Here based on the introduction of internal control variables and the interaction between internal control and investor sentiment,this paper explores the inhibitory effect of internal control on corporate inefficient investment caused by investor sentiment.The study found that investor sentiment will not only affect the long-term and short-term investment of enterprises,but also cause inefficient investment of enterprises,that is,overinvestment and underinvestment.The impact of investor sentiment on corporate investment behavior is two-sided.On the one hand,investor sentiment is positively related to short-term investment behavior and negatively related to long-term investment behavior.On the other hand,investor sentiment and corporate investment are showing the same change in the same direction,and corporate investment insufficiency is showing the opposite change;and the improvement of the quality of internal control can not only improve the impact of investor sentiment on long-term and short-term investment,but also weaken the inefficiencies caused by investor sentiment.Therefore,enterprises should pay attention to the improvement of internal control quality,broaden information communication channels,use technical means to strengthen the implementation and supervision of internal control systems,standardize their investment behavior,and avoid the impact of investor sentiment fluctuations on their investment behavior.