Empirical Study on the Relation between the Financial Information Utility and Investment Performance Based on Behavior Analysis
|School||Harbin Institute of Technology|
|Keywords||financial information investment performance behavioral finance|
How investors in stock market could obtain excess profits through makingrational decisions has attracted considerable attention among domestic and foreignscholars. On one hand, beginning with the study of the personal investmentpsychology, behavioral finance theory breaks through the limitations of traditionalfinance theory and shows the inherent cognitive deviation in picking stock forinvestors, consequently making this theory important foundation in studyinginvestors’ irrational decisions. On the other hand, in value investment, rationalinvestment should be long-term investment placing emphasis upon the fu ndamentalsof the company and as crucial information reflecting fundamentals of stock, theutilization of financial information is directly related to rationality degree. In thestudy of the relation between financial information and investment performance,traditional empirical accounting is devoted to showing value relevance of financialinformation from the perspective of the whole market which lacks for the study ofinvestment performance of individual investor on a microscopic level. Therefore,the impact of financial information on investment behavior of stock investors andwhether it could improve the investment income through the financial informationutility are the main research contents in the paper.From the perspective of behavioral analysis, this paper discusses the relationbetween the degree of financial information utility and investment performance inpicking stock. Firstly, combining the behavioral finance theory and the investor’sinformation bias theory, based on the analysis of investor’s irrational cognitivedeviation, we classify investor’s behavior of picking stock into two modes: highfinancial information utility and low financial information utility and put forwardresearch hypothesis based on the theoretical analys is of the investment performancein such different modes. Then we adopt questionnaire method to collect data andmake statistics on the survey results of individual investor’s degree of financialinformation utility, investment behavior and investment performance. Finally, webuild ordered logistic model and through testing the samples, we conclude thatimproving concern degree to financial information can help individual investorobtain better investment performance and reduce the ill impact of irrationalinvestment behavior such as frequent trading and herding behavior on theinvestment income.