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

James C. Brau, James Cicon and Stephen R. Owen
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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

IJFS, 2022, vol. 10, issue 2, 1-24

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.

Keywords: IPO; IPO underpricing; text analysis (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2022
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