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A Textual Analysis of Logograms in Chinese IPO Roadshows: How Agreement between Investors and Management Relates to Pricing and Performance

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  • James C. Brau

    (Marriott School of Business, Brigham Young University, Provo, UT 84604, USA)

  • James Cicon

    (Harmon School of Business and Professional Studies, University of Central Missouri, Warrensburg, MO 64093, USA)

  • Stephen R. Owen

    (G. Brint Ryan College of Business, University of North Texas, Denton, TX 76203, USA)

Abstract

We analyze the interaction between management and investors during Chinese IPO roadshows through Jaccard Similarity analysis of written Chinese logograms. We provide evidence that when agreement is high, investor optimism increases, leading to relatively large first-day underpricing. We further show that high agreement biases investors to systematically overestimate IPO prospects leading to poor long-run abnormal performance. Jaccard Similarity is different from current content analysis methodologies because it is language and culture agnostic, requiring no a priori construction of thematic dictionaries. Elimination of such dictionaries removes the danger that the researcher has imposed predispositions upon the study.

Suggested Citation

  • James C. Brau & James Cicon & Stephen R. Owen, 2022. "A Textual Analysis of Logograms in Chinese IPO Roadshows: How Agreement between Investors and Management Relates to Pricing and Performance," IJFS, MDPI, vol. 10(2), pages 1-24, April.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:2:p:25-:d:785009
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    References listed on IDEAS

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