Economic Fluctuations,Financial Performance Sustainability And Inefficient Investment

As one of the three major financial decisions of an enterprise,investment decision is directly related to the value creation of the enterprise and the resource allocation at the macro level,which is crucial to the development of the enterprise.However,the phenomenon of inefficient investment is common in enterprises.Based on the perspective of managers' cognitive bias in behavioral finance,this paper analyzes the influence of economic fluctuations and financial performance sustainability on the non-efficient investment of enterprises from the macro and micro levels by using multiple regression.This paper expands the research on behavioral finance in investment decision-making,which is of great significance for strengthening managers' self-cognition and helping managers avoid inefficient investment.First of all,this paper has defined the concepts of macroeconomic volatility,financial performance sustainability and non-efficient investment by combing domestic and foreign research literatures in recent years,and elaborated the research background and theoretical basis of this paper.Secondly,it introduces the status quo of China's macroeconomic environment,the financial status of China's enterprises and the status quo of investment.Thirdly,taking the a-share listed companies in Shanghai and Shenzhen stock exchanges from 2007 to 2017 as the research samples,multiple regression analysis was used to empirically test the impact of economic fluctuations on non-efficient investment,the impact of financial performance sustainability on non-efficient investment,and the interaction between the two on non-efficient investment.Research shows that companies in times of economic expansion or with high sustained financial performance before investment have higher levels of overinvestment or lower levels of underinvestment due to representative heuristic bias.Furthermore,economic volatility and high financial performance sustainability can jointly promote the overinvestment of enterprises and restrain the underinvestment of enterprises.Finally,based on the research conclusion of this paper and from the perspective of managers' cognitive bias,this paper puts forwardcountermeasures and suggestions to strengthen managers' self-cognition,avoid enterprises' inefficient investment and improve their financial performance from the perspectives of enterprises' internal,third-party institutions and regulatory departments.