Do markets value manager-investor interaction quality? Evidence from IPO returns

Shibo Bian (), Iftekhar Hasan, Xunxiao Wang () and Zhipeng Yan ()
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Shibo Bian: Shanghai University of Finance and Economics
Xunxiao Wang: Shanghai University of Finance and Economics
Zhipeng Yan: Shanghai Jiao Tong University

Review of Quantitative Finance and Accounting, 2024, vol. 63, issue 2, No 7, 599-632

Abstract: Abstract This paper investigates the impact of manager-investor interaction quality on stock returns by utilizing an online IPO roadshow dataset and leveraging a word-embedding model. We find that such interactions are positively valued, as reflected in initial returns. The effect is particularly pronounced for firms characterized by higher levels of information asymmetry, greater investor attention, increased question uncertainty, or discussions on topics not covered in prospectus. Additionally, our research reveals that effective management communication leads to increased first-day turnover rates and thus higher returns. These heightened returns persist up to 180 days following the IPO, without displaying a significant long-term reversal associated with interaction quality. These findings underscore the meaningful impact of the quality of manager-investor interactions on firm valuation.

Keywords: Online roadshow; Manager-investor interactions; Initial returns (search for similar items in EconPapers)
JEL-codes: G12 G14 G24 G32 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11156-024-01267-3

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