Keywords
IPO, IPO underpricing, text analysis
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.
Original Publication Citation
A Textual Analysis of Logograms in Chinese IPO Roadshows: How Agreement between Investors and Management Relates to Pricing and Performance, with Jim Cicon and Stephen Owen, International Journal of Financial Studies, Vol 10, Iss. 2, 2022, 1-24.
BYU ScholarsArchive Citation
Brau, James C.; Cicon, James; and Owen, Stephen R., "A Textual Analysis of Logograms in Chinese IPO Roadshows: How Agreement between Investors and Management Relates to Pricing and Performance" (2022). Faculty Publications. 9194.
https://scholarsarchive.byu.edu/facpub/9194
Document Type
Peer-Reviewed Article
Publication Date
2022
Publisher
International Journal of Financial Studies
Language
English
College
Marriott School of Business
Department
Finance
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