Is Real Investment-Sentiment Sensibility Symmetrical?--Evidence from China

Basing on the assumption that of rational managers coexist with the irrational investors, this paper develops a manager's optimal investment decision model including both of catering channel and equity issuance channel, to analyze the asymmetrical effects of investors irrational sentiments on firms investment decision in different period of stock market, and examines the theoretical results using the data of Chinese listed firms as samples. It shows that, because of some investors' belief bias such as self-attribution and overconfidence or instability preference such as loss aversion and disposition effect, the firms' investments are more sensitive to investor sentiments in the upward period of market than that in the downward period of market through the catering channel and equity issuance channel.