The Impact of Investor Sentiment on Corporate Investment

Abstract

With the development of the capital market and the real economy, enterprise investment is getting more and more attention; enterprise investment and the survival of the whole enterprise have a close link, with more and more phenomena presented in the market, the traditional finance in the "rational man" and "market effectiveness With more and more phenomena appearing in the market, the assumptions of "rational man" and "market effectiveness" in traditional finance are not enough to give these phenomena a reasonable explanation, and the emergence of behavioral finance relaxes the assumptions and makes the theory able to explain financial anomalies in the real market. China's capital market started late, and individual investors accounted for most factors in their investor decision-making that tend to irrational investment. This paper discusses the impact of investor sentiment changes on listed companies' investment from the perspective of behavioral finance and analyses the theoretical modeling and empirical modeling from two perspectives. Firstly, there are more individual investors in China's capital market, and it is more novel to study the investment angle of the capital market from the perspective of investor sentiment, so this study has significance to the market; secondly, it discusses the literature review of the relationship between investor sentiment and listed enterprises' investment by scholars in the past, and analyses the former's impact on the latter from theoretical modeling and puts forward hypotheses; after that, we use empirical methods to prove whether the hypotheses are valid or not; and finally analyses the results of the empirical research, the shortcomings of this paper's research and the constructive suggestions and future research space for the topics discussed in this paper.