The Long-Run Role of the Media: Evidence from Initial Public Offerings
Laura Xiaolei Liu
Hong Kong University of Science & Technology
Ann E. Sherman
Hong Kong University of Science & Technology (HKUST)
January 8, 2011
Midwest Finance Association 2013 Annual Meeting Paper
The unique characteristics of the U.S. initial public offer (IPO) process, particularly the strict quiet period regulations, allow us to explore the effects of media coverage when the coverage does not contain genuine news (hard information that was previously unknown). We show that a simple, objective measure of pre-IPO media coverage is positively related to the stock’s long term value, liquidity, analyst coverage, and institutional investor ownership. We do not find a relationship between pre-IPO media coverage and long term underperformance. In all, adding to the short term role of attention documented in Da, Engelberg and Gao (2011), we find a long term role for media coverage, consistent with Merton’s (1987) investor recognition hypothesis.
Number of Pages in PDF File: 47
Keywords: media coverage, IPO, initial public offering, investor attention, Merton, investor recognition
JEL Classification: G12, G14, G32, G24working papers series
Date posted: January 9, 2011 ; Last revised: January 22, 2013
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.703 seconds