Influence of Psychological and Emotional Factors on the Venture Enterprise Value and the Investment Decision-Making

摘要

The development of behavioral finance has proposed an outstretched idea for traditional model, that the irrational behavior of venture entrepreneurs and venture capitalists has an important impact on the corporation's investment decision-making. This paper, based on the optimal effort model for double-sided moral hazard, has discussed the influence of the entrepreneurs’ and venture capitalists’ psychological and emotional factors on the venture enterprise value and the investment decision-making. And it turned out that moderate confidence of entrepreneurs and investors are able to offset the impact of moral hazard. Overconfidence of entrepreneurs may lead to lower corporate value, but it may also make the venture enterprise with a negative NPV get investment, while overconfidence of investors may cause overreaction in investment decision-making. Entrepreneurs’ negative and conservative psychology may result in the reduction of firm value, and the venture enterprise with positive net revenue may face the refusal to invest. The venture capitalists’ negative and conservative psychology may result in under reaction in the decision-making process. The research is helpful to the decision making when people analyze venture capitalist’ and entrepreneurs’ decisions under different circumstances of emotional psychology.