Author(s)

Yulu Ouyang

Corresponding Author

Yulu Ouyang

ABSTRACT

The investment decisions of listed companies are influenced by peers, which is called the peer effect. This paper distinguishes between heterogeneous and homogeneous peers through text similarity to the degree of association of companies in the industry. On this basis, this paper tests the peer effect and competitive mode of listed companies' investment decisions. The results show that listed companies' investment decisions in China have a significant heterogeneous peer effect. Contrary to the competitive assumption of homogeneous peers, heterogeneous peers produce a complementary peer effect, which is more significant in non-state-owned and competitive enterprises. There is a race-to-bottom competition model based on the complementary peer effect of heterogeneous peers.

KEYWORDS

Peer Effect, Corporate Investment, Text Similarity