Innovation in technology companies serves as a crucial metric for assessing their value and forms the foundation for their initial public offering(IPO)pricing.Innovation information is mostly disclosed in textual qualitative information,making descriptive innovation information is a key focus for investors in technology companies.However,the technical and complex nature of innovative information may impact the quality of information disclosure due to the readability of the text.The authors analyze the readability of descriptive innovation information in prospectuses of companies listed on the Science and Technology Innovation Board(STAR Market).The study finds that the lower the text readability is,the higher the degree of IPO underpricing is.This effect is more significant in the sample groups with a high proportion of institutional investors,high degree of marketization in the company's registration location,low ownership concentration,and underwriting by highly reputable underwriters.The authors suggest that management may have a motive to lower the readability of prospectuses for impression management,by increasing investors'information acquisition costs,enhancing information asymmetry with the issuer,impeding the market's ability to achieve fair pricing,ultimately resulting in increased IPO underpricing.The authors focus on the readability analysis of descriptive financial text for the first time,expanding the scope of Chinese financial text analysis research.By combining impression management theory with information disclosure,the study offers a new insight into examining IPO underpricing issues from the perspective of innovative text analysis.
IPO underpricingDescriptive innovationThe STAR MarketText read-abilityInformation asymmetry
维普
万方数据
