Driving the Presence of Investor Sentiment: The Role of Media Tone in IPOs

Jiaxing YOU, Jerry COAKLEY, Michael Arthur FIRTH, Ana-Maria FUERTES, Zhe SHEN

Research output: Other Conference ContributionsConference Paper (other)Other Conference Paperpeer-review


We read all newspaper articles to measure the pre-IPO media tone for 1,068 Chinese book-built IPOs issued from 2005–2013. We document significant and robust evidence that media tone is related to high IPO first day returns and low long-run abnormal returns. One positive newspaper article can predict an increase of 2.38 – 9.42 percentage points in first-day returns and a decrease of 3.26 – 10.09 percentage points in postIPO three-year abnormal returns. Further analysis reveals that high pre-IPO media tone is positively associated with first-day retail trading and retail demand in the IPO market, indicating that pre-IPO media tone can enhance the presence of investor sentiment around the IPO event. Taken together, these findings are consistent with our hypothesis that media tone can influence post-IPO prices through the presence of investor sentiment, leading to high first-day returns and low long-run stock performance.
Original languageEnglish
Publication statusPublished - Oct 2018
Event2018 Financial Management Association Annual Meeting - San Diego, United States
Duration: 10 Oct 201813 Oct 2018


Conference2018 Financial Management Association Annual Meeting
Abbreviated title2018 FMA
Country/TerritoryUnited States
CitySan Diego
Internet address


  • IPO
  • Media Tone
  • Investor Sentiment
  • China

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