The Effect Of Negative Tone Of Prospectus To IPO Underpricing

Effective information disclosure is the cornerstone of the sustainable operation of the capital market.In the IPO market,whether the public information in the prospectus can be fully captured by investors depends largely on the quality of the relevant information,which affects the earnings on the first day of listing.Text is an unstructured data,and it deeply affected accounting and financial fields in the past decade.Based on text non-structured data,the text analysis technology is used to measure the textual emotions(tone characteristics),and the relationship between textual emotions and external financial indicators can be studied by constructing emotional indicators.In this paper,we investigated A-share company’s prospectuses listed from 2010 to 2020,improve the construction method of Chinese financial text dictionary.Based on the construction of general financial dictionary,we decided the tone of overall text by external market feedback indicators.And resorted the orders of the positive and negative words by a penalty mechanism word frequency method.On the measurement of the negative tone of text,the negative tone contained in the IPO prospectus is quantified by text analysis methods,and the quantification method has improved the existing simple word frequency statistics.On the basis of the equivalent word frequency statistics method,we used the method which is widely used in document search field,to adjust the weight of the positive and negative words.That is,the weight of each word is inversely proportional to the frequency of the word in the documents.On this basis,we investigated the impact of the negative tone to IPO underpricing rate.The results show that the negative tone of the prospectus is significantly positively related to the earlier underpricing rate.The conclusion shows that the prospectus has a high effective information content,and its quantitative results have certain interpretation capabilities in the initial performance of IPO.