2017
DOI: 10.1016/j.jcorpfin.2017.06.003
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Media sentiment and IPO underpricing

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Cited by 150 publications
(93 citation statements)
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“…Consider two different firms, one that receives relatively more favorable media coverage (i.e., media sentiment closer to 1) and another that receives relatively more negative media coverage (i.e., media sentiment closer to −1). Recent research shows that firms with relatively more positive media sentiment are more likely to be considered for funding (Aggarwal & Singh, ; Bajo & Raimondo, ). While the actual matching of VCs and ventures may be endogenous, a technology venture's media sentiment (i.e., the combination of positive and negative media reporting about the venture) is exogenous.…”
Section: Analysis and Resultsmentioning
confidence: 99%
“…Consider two different firms, one that receives relatively more favorable media coverage (i.e., media sentiment closer to 1) and another that receives relatively more negative media coverage (i.e., media sentiment closer to −1). Recent research shows that firms with relatively more positive media sentiment are more likely to be considered for funding (Aggarwal & Singh, ; Bajo & Raimondo, ). While the actual matching of VCs and ventures may be endogenous, a technology venture's media sentiment (i.e., the combination of positive and negative media reporting about the venture) is exogenous.…”
Section: Analysis and Resultsmentioning
confidence: 99%
“…9 A high dispersion in the distribution of terms is observed in natural language processing. 10 See, for example, Ritter (1984), Beatty and Welch (1996), Ljungqvist, Jenkinson, and Wilhelm (2003), Park, Borah, and Kotha (2017), Guldiken et al (2017), Bajo and Raimondo (2017), Benson et al (2015), Bertoni, Meoli, and Vismara (2014), Akyol et al (2014), Loughran and McDonald (2013), Ferris et al (2013), Ekkayokkaya and Pengniti (2012), and Liu and Ritter (2011). 11 Higher first-day returns imply more underpricing for the initial offer.…”
Section: Discussionmentioning
confidence: 99%
“…Some of these studies present evidence about the role of news sentiment in predicting stock and market returns (Chen & De, 2014;Dougal & Engelberg, 2012;Garcia, 2013). Mayew and Venkatachalam (2012) used the dictionaries to look at conference calls and future performance, whereas Solomon (2012) and Bajo and Raimondo (2017) considered media coverage and stock prices. Liu and McConnell (2013) studied media attention to proposed acquisitions and the probability of abandoning a deal.…”
Section: Theoretical Framework and Hypothesis Developmentmentioning
confidence: 99%
“…They document that price reactions are more pronounced when the press covers (and emphasizes) the announcements, and this effect is stronger for firms with greater information asymmetry problems (i.e., smaller firms with lower analyst coverage) and for more reputable newspapers . Later studies have added further evidence of the media's effect on financial markets: pessimism in the media pushes stock prices downward, followed by a reversion to fundamentals (Tetlock, ); local media coverage strongly predicts local trading (Engelberg & Parsons, ); the media reduce insiders’ future trading profits by disseminating news on prior insider trades reported by regulatory releases (Dai, Parwada, & Zhang, ); the media influence retail investors’ behavior during initial public offerings (Bajo & Raimondo, ); and the media increase stock return momentum (Hillert, Jacobs, & Müller, ) or influence both a fund's propensity to buy stocks of the most covered firms (Fang et al, ) and mutual fund inflows (Solomon, Soltes, & Sosyura, ). One could argue that the association between media coverage and its impact on the financial market suffers from an endogeneity problem, since it is difficult to accept that what is reported in newspapers is exogenous.…”
Section: Literature Reviewmentioning
confidence: 99%