並列摘要
This paper constructs an adverse selection model to infer the relationship between reputation and investment, through evaluating the consideration of outside investors in terms of the reputation of the firms. It is concluded that there are three ways firms will manipulate reputation effects. 1) ＂Using the reputation effect: given the same type of firms, the probability of investing in firms with high reputation is greater than in firms with low reputation; that is, the effect of promoting investment by high reputation. 2) ＂Strengthening the reputation effect: given the same reputation of firms, the probability of investing in good-type firms is greater than in bad-type firms; that is, the effect of strengthening their reputation by investing. 3) ＂The signaling effect: when a good company's reputation is evaluated as low, it will invest to spread that the company is actually a good company. Moreover, this model finds that the bad-type firms with high reputation are predicted to experience over-investment, and in return, the three reputation effects are applied to explain the behavior of over-investment.