Open Access

Stock market behavior and investor sentiment: Evidence from China

Frontiers of Business Research in ChinaSelected Publications from Chinese Universities20082:16

Received: 14 November 2007

Published: 30 July 2008


The relationship among stock returns, market volatilities and individual investor sentiment is an important topic in behavioral economics and finance. This paper uses a unique data set—China’s newly opened stock trading accounts to test the relationships among stock returns, volatilities and individual investor sentiment in the Chinese stock market. It is found that there is a positive relationship between shifts in sentiment and stock returns, and that shifts in sentiment are negatively correlated with market volatility, that is to say, volatility increases (decreases) when investors become more bearish (bullish).


investor sentimentvolatilitynewly opened stock trading accounts