Perceptions and Price: Evidence from CEO Presentations at IPO Roadshows

This paper examines the relation between cognitive perceptions of management and firm valuation. We develop a composite measure of investor perception using 30-second content-filtered video clips of initial public offering (IPO) roadshow presentations. We show that this measure, designed to capture viewers’ overall perceptions of a CEO, is positively associated with pricing at all stages of the IPO (proposed price, offer price and end of first day of trading). The result is robust to controls for traditional determinants of firm value. We also show that firms with highly perceived management are more likely to be matched to high-quality underwriters. In further exploratory analyses, we find the impact is greater for firms with more uncertain language in their written S-1. Taken together, our results provide evidence that investors’ instinctive perceptions of management are incorporated into their assessments of firm value.

Keywords: investor perception, valuation, CEO, IPO, roadshow

JEL Classification: G12, G14, M12, M13, M41

Suggested Citation: Suggested Citation

Blankespoor, Elizabeth and Hendricks, Bradley E. and Miller, Gregory S., Perceptions and Price: Evidence from CEO Presentations at IPO Roadshows (January 4, 2017). Journal of Accounting Research, Vol 55, No. 2, May 2017, Stanford University Graduate School of Business Research Paper No. 15-35, Rock Center for Corporate Governance at Stanford University Working Paper No. 206, Available at SSRN: https://ssrn.com/abstract=2611756 or http://dx.doi.org/10.2139/ssrn.2611756