IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v68y2021ics0927538x21000950.html
   My bibliography  Save this article

Can management tone predict IPO performance? – Evidence from mandatory online roadshows in China

Author

Listed:
  • Bian, Shibo
  • Jia, Dekui
  • Li, Ruihai
  • Sun, Wujun
  • Yan, Zhipeng
  • Zheng, Yingfei

Abstract

In this study, we investigate the relation between the sentiment of online roadshow texts and IPO first-day returns as well as post-IPO operating performancein China's stock market. Our results suggest that a higher positive tone in management's responses and comments during online roadshows is significantly associated with greater first-day returns. The results also show that the management tone is significantly and positively related to post-IPO operating performance. Our study indicates that the tone of online roadshows is informative and its information content has important implications for understanding IPO first-day returns and future operating performance in China's stock market.

Suggested Citation

  • Bian, Shibo & Jia, Dekui & Li, Ruihai & Sun, Wujun & Yan, Zhipeng & Zheng, Yingfei, 2021. "Can management tone predict IPO performance? – Evidence from mandatory online roadshows in China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:pacfin:v:68:y:2021:i:c:s0927538x21000950
    DOI: 10.1016/j.pacfin.2021.101588
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X21000950
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2021.101588?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Skinner, Dj, 1994. "Why Firms Voluntarily Disclose Bad-News," Journal of Accounting Research, Wiley Blackwell, vol. 32(1), pages 38-60.
    2. Roger G. Ibbotson & Jody L. Sindelar & Jay R Ritter, 1994. "The Market'S Problems With The Pricing Of Initial Public Offerings," Journal of Applied Corporate Finance, Morgan Stanley, vol. 7(1), pages 66-74, March.
    3. Andrew Ellul & Marco Pagano, 2006. "IPO Underpricing and After-Market Liquidity," The Review of Financial Studies, Society for Financial Studies, vol. 19(2), pages 381-421.
    4. Kathleen Weiss Hanley, 2010. "The Information Content of IPO Prospectuses," The Review of Financial Studies, Society for Financial Studies, vol. 23(7), pages 2821-2864, July.
    5. John E. Core & Wayne R. Guay & Tjomme O. Rusticus, 2006. "Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations," Journal of Finance, American Finance Association, vol. 61(2), pages 655-687, April.
    6. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    7. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    8. Liu, Baixiao & McConnell, John J., 2013. "The role of the media in corporate governance: Do the media influence managers' capital allocation decisions?," Journal of Financial Economics, Elsevier, vol. 110(1), pages 1-17.
    9. Jegadeesh, Narasimhan & Wu, Di, 2013. "Word power: A new approach for content analysis," Journal of Financial Economics, Elsevier, vol. 110(3), pages 712-729.
    10. James Doran & David Peterson & S. Price, 2012. "Earnings Conference Call Content and Stock Price: The Case of REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 45(2), pages 402-434, August.
    11. Kristian D. Allee & Matthew D. Deangelis, 2015. "The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 241-274, May.
    12. Casey Dougal & Joseph Engelberg & Diego García & Christopher A. Parsons, 2012. "Journalists and the Stock Market," The Review of Financial Studies, Society for Financial Studies, vol. 25(3), pages 639-679.
    13. Elizabeth Blankespoor & Bradley E. Hendricks & Gregory S. Miller, 2017. "Perceptions and Price: Evidence from CEO Presentations at IPO Roadshows," Journal of Accounting Research, Wiley Blackwell, vol. 55(2), pages 275-327, May.
    14. James C. Brau & James Cicon & Grant McQueen, 2016. "Soft Strategic Information and IPO Underpricing," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 17(1), pages 1-17, January.
    15. Loughran, Tim & McDonald, Bill, 2013. "IPO first-day returns, offer price revisions, volatility, and form S-1 language," Journal of Financial Economics, Elsevier, vol. 109(2), pages 307-326.
    16. Kearney, Colm & Liu, Sha, 2014. "Textual sentiment in finance: A survey of methods and models," International Review of Financial Analysis, Elsevier, vol. 33(C), pages 171-185.
    17. Diego García, 2013. "Sentiment during Recessions," Journal of Finance, American Finance Association, vol. 68(3), pages 1267-1300, June.
    18. Yuping Jia & Laurence Van Lent & Yachang Zeng, 2014. "Masculinity, Testosterone, and Financial Misreporting," Journal of Accounting Research, Wiley Blackwell, vol. 52(5), pages 1195-1246, December.
    19. Elizabeth Demers & Clara Vega, 2008. "Soft information in earnings announcements: news or noise?," International Finance Discussion Papers 951, Board of Governors of the Federal Reserve System (U.S.).
    20. Tim Loughran & Bill Mcdonald, 2016. "Textual Analysis in Accounting and Finance: A Survey," Journal of Accounting Research, Wiley Blackwell, vol. 54(4), pages 1187-1230, September.
    21. Binxi Cui & Chaojun Yang, 2018. "Equity financing constraints and R&D investments: evidence from an IPO suspension in China," China Finance Review International, Emerald Group Publishing Limited, vol. 8(2), pages 158-172, April.
    22. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, vol. 62(3), pages 1139-1168, June.
    23. Yan, Yumeng & Xiong, Xiong & Meng, J. Ginger & Zou, Gaofeng, 2019. "Uncertainty and IPO initial returns: Evidence from the Tone Analysis of China’s IPO Prospectuses," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    24. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    25. Stephen P. Ferris & (Grace) Qing Hao & (Stella) Min-Yu Liao, 2013. "The Effect of Issuer Conservatism on IPO Pricing and Performance," Review of Finance, European Finance Association, vol. 17(3), pages 993-1027.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shuangyan Li & Guangrui Wang & Yongli Luo, 2022. "Tone of language, financial disclosure, and earnings management: a textual analysis of form 20-F," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-24, December.
    2. Feng, Guo & Tang, Bo & Wen, Jipeng & Yan, Shuo, 2022. "The effect on stock performance of executives' emotions during IPO roadshows," International Review of Financial Analysis, Elsevier, vol. 81(C).
    3. Jun Qi & Qinwei Chi & Ni Yang & Junyan Ouyang, 2023. "The Impact of the Tone of a Prospectus on IPO Underpricing: Evidence from China," Australian Accounting Review, CPA Australia, vol. 33(4), pages 375-390, December.
    4. Zhang, Shengpeng & Li, Yaokuang & Liang, Ruixin & He, Yu, 2024. "Does management tone matter in information disclosure? Evidence from IPO online roadshows in the SSE STAR market," International Review of Financial Analysis, Elsevier, vol. 94(C).
    5. Zhang, Da & Wang, Yuxia, 2024. "Can management tone predict the firm's decision on supply chain configuration?," Finance Research Letters, Elsevier, vol. 62(PB).
    6. Ding, Rui & Guo, Jintong & Zhang, Min, 2024. "Practice a poker face: Manager emotion and investor sentiment," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tim Loughran & Bill Mcdonald, 2016. "Textual Analysis in Accounting and Finance: A Survey," Journal of Accounting Research, Wiley Blackwell, vol. 54(4), pages 1187-1230, September.
    2. Bask, Mikael & Forsberg, Lars & Östling, Andreas, 2024. "Media sentiment and stock returns," The Quarterly Review of Economics and Finance, Elsevier, vol. 94(C), pages 303-311.
    3. Yan Luo & Linying Zhou, 2020. "Textual tone in corporate financial disclosures: a survey of the literature," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 101-110, September.
    4. Christina Bannier & Thomas Pauls & Andreas Walter, 2019. "Content analysis of business communication: introducing a German dictionary," Journal of Business Economics, Springer, vol. 89(1), pages 79-123, February.
    5. Ardia, David & Bluteau, Keven & Boudt, Kris, 2022. "Media abnormal tone, earnings announcements, and the stock market," Journal of Financial Markets, Elsevier, vol. 61(C).
    6. Senave, Elseline & Jans, Mieke J. & Srivastava, Rajendra P., 2023. "The application of text mining in accounting," International Journal of Accounting Information Systems, Elsevier, vol. 50(C).
    7. Guo, Haifeng & Wang, Ying & Wang, Bo & Ge, Yuanjing, 2022. "Does prospectus AE affect IPO underpricing? A content analysis of the Chinese stock market," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 1-12.
    8. Daniele Ballinari & Simon Behrendt, 2021. "How to gauge investor behavior? A comparison of online investor sentiment measures," Digital Finance, Springer, vol. 3(2), pages 169-204, June.
    9. Ahmad, Khurshid & Han, JingGuang & Hutson, Elaine & Kearney, Colm & Liu, Sha, 2016. "Media-expressed negative tone and firm-level stock returns," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 152-172.
    10. Ingrid E. Fisher & Margaret R. Garnsey & Mark E. Hughes, 2016. "Natural Language Processing in Accounting, Auditing and Finance: A Synthesis of the Literature with a Roadmap for Future Research," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 23(3), pages 157-214, July.
    11. Katsafados, Apostolos G. & Androutsopoulos, Ion & Chalkidis, Ilias & Fergadiotis, Manos & Leledakis, George N. & Pyrgiotakis, Emmanouil G., 2020. "Textual Information and IPO Underpricing: A Machine Learning Approach," MPRA Paper 103813, University Library of Munich, Germany.
    12. Carlini, Federico & Cucinelli, Doriana & Previtali, Daniele & Soana, Maria Gaia, 2020. "Don't talk too bad! stock market reactions to bank corporate governance news," Journal of Banking & Finance, Elsevier, vol. 121(C).
    13. Liu, Sha & Han, Jingguang, 2020. "Media tone and expected stock returns," International Review of Financial Analysis, Elsevier, vol. 70(C).
    14. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    15. Shuangyan Li & Guangrui Wang & Yongli Luo, 2022. "Tone of language, financial disclosure, and earnings management: a textual analysis of form 20-F," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-24, December.
    16. Renault, Thomas, 2017. "Intraday online investor sentiment and return patterns in the U.S. stock market," Journal of Banking & Finance, Elsevier, vol. 84(C), pages 25-40.
    17. Ramiro Losada, 2022. "La información pública periódica de los fondos de inversión: como influyen en las decisiones de los inversores," CNMV Documentos de Trabajo CNMV Documentos de Trabaj, CNMV- Comisión Nacional del Mercado de Valores - Departamento de Estudios y Estadísticas.
    18. Ramiro Losada, 2022. "Periodic public information on investment funds and how it influences investors´ decisions," CNMV Working Papers CNMV Working Papers no. 7, CNMV- Spanish Securities Markets Commission - Research and Statistics Department.
    19. Bassyouny, Hesham & Abdelfattah, Tarek & Tao, Lei, 2022. "Narrative disclosure tone: A review and areas for future research," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).
    20. Dimitris Anastasiou & Apostolos Katsafados, 2023. "Bank deposits and textual sentiment: When an European Central Bank president's speech is not just a speech," Manchester School, University of Manchester, vol. 91(1), pages 55-87, January.

    More about this item

    Keywords

    Textual analysis; Online roadshow; Management tone; First-day returns; Post-IPO operating performance;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:68:y:2021:i:c:s0927538x21000950. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.