The Study Of Managers And Investors' Sentiment On IPO Pricing And The Investment Performance Of IPO Companies

During the process of IPO pricing In the IPO market,the managers put in the company's "management information" to the market by the media and other means,investors watch these information and choose different trading behavior by valuing it,creating ?price information? and ?sentiment information?,and further feedback to the IPO of the company's managers,the managers choose the corresponding investment strategy by valuing the two different information,and creating a now ?management information? to the market,thus forming a information cycle.So studying the of internal mechanism that how managers and investors' sentiment influence the information circulation in IPO market,not only can enrich related theory about the behavior of managers and investors behavior on ?IPO puzzle?,also on provide practical basis for making financial regulatory policy,investors' trading behavior and the operation of the IPO companies.Based on the inquiry mechanism in China,this paper has four main parts.Firstly,from the perspective of motivation of media coverage,we study the influence mechanism of managers over-optimism on IPO underpricing;Secondly,Based on the background of the IPO inquiry mechanism in China,we expands the investor behavior into two dimensions,namely institutional investors' sentiment and individual investors' irrational sentiment,in order to analyze and explain the phenomenon of "high over-funding,high premium" from a micro perspective;Thirdly,from the theory of emotional contagion,we study investors how to shape managers over-optimism in the market,and further affect the investment performance of IPO firms;Finally,we study the influence of excessive optimism on the use of overfunds.The main contents and conclusions of this paper include:Firstly,Based on the analysis of information function and emotional function of media and using the data of the baidu search engine and 1429 a-share IPOs in China from 2009-2016,we study the influence mechanism of managers over-optimism to IPO underpricing from the perspective of information producing.We find that: In the process of IPO,relative to not over-optimism managers,over-optimism managers are easy to overestimate the enterprise value,more willing to pass the faith to others participants by producing information,leading to higher media public relations cost and more media coverage.On the whole,this helps to reduce information asymmetry in the market,and thus decreases the rate of IPO underpricing on the first day,and the effect is more outstanding when the media report is poor.Secondly,from the perspective of investors' cognition,we expands the investor behavior into two dimensions,namely institutional investors' sentiment and individual investors' irrational sentiment.Based on the inquiry mechanism of the IPO issuing in China,A model is established to find the market equilibruium price of IPO company under the assumption of utility maximization,in order to analyze and explain the phenomenon of "high over-funding,high premium" from a micro perspective.The study finds that: Whether the IPO company will be over-funding or not depends on the private information of institutional investors,the over-funding level of IPO company is negatively correlated with the sentiment of institutional investors;Individual investors are the key to the first-day high premium rate of IPO in Chinese stock market,the higher the irrational sentiment of individual investors,the higher the first-day premium rate;The first-day premium rate is positively correlated with institutional investors' sentiment.Thirdly,from the perspective of managers' cognition,we study that investors` sentiment how to shape managers over-optimism,and further affect the investment performance of IPO companies.The results shows that: Institutional investors` sentiment and individual investors irrational sentiment both can shape the over-optimism of the IPO company managers,institutional investors` sentiment has a significantly negative correlation with the over-optimism of the IPO company managers;individual investors irrational sentiment has a significantly negative correlation with the over-optimism of the IPO company managers;When IPO companies have a high over-funding,the over-optimism of the IPO company managers can aggravate over-investment behavior and damage the performance of IPO companies;When IPO companies have a low over-funding,the over-optimism of the IPO company managers can alleviate the underinvestment caused by lack of cash,that would help improve the company's performance.At the same time,individual investors` irrational sentiment would affect the performance of IPO companies by the ?intermediate channel of managerial over-optimism?.Finally,the sample of the non-financial IPO companies of Shanghai and Shenzhen between 2009 and 2014 in China is used to examine the impact of managers` over-optimism on the use of the over-funding.The results show that: there is a significantly positive relationship between the over-funding and the level of the IPO companies acquisition investment;when IPO companies have plenty of over-funding,the firms with managers` over-optimism will be more mergers and acquisitions than the firms without over-optimism managers;the over-funding has a significantly negative correlation with the level of the capital investment,and the firms with over-optimism managers also are not keen on using over-funding more capital investment.But many domestic and international studies have found that the mergers and acquisitions of the listed company were generally inefficient.