Empirical Research on Herding Behavior of Corporate Financing Decisions

This paper tests for the herding behavior of corporate financing decisions using factor analysis and K-Means cluster method to the samples of China Securities 300 sector indices announced on January 1, 2006. The empirical research results show that the characteristics system of financing mode is constituted by six factors, size and capital structure, management shareholdings, corporate values, growth, profitability, operating ability and solvency, among which the leader-herd index has a significant positive impact on the size and capital structure. On the basis of factor analysis, using factor score instead of observation variable to do K-Means cluster analysis, it divides financing decision mode into three clusters, "size-leading enterprises", "growth enterprises" and "herd enterprises". And in the clustering process, size and capital structure plays a significant role on the enterprise's debt financing in 5% significant level. Finally research indicates financing decision mode has significant herd behavior.