This paper examines what determines the offer price for a ChiNext IPO and discusses how we can improve the current ＂Chinese-style＂ bookbuilding process. We establish that the ChiNext IPO underwriter relies upon the ...This paper examines what determines the offer price for a ChiNext IPO and discusses how we can improve the current ＂Chinese-style＂ bookbuilding process. We establish that the ChiNext IPO underwriter relies upon the institutional investors to discover the issuer＇s intrinsic value （in the form of a preliminary price）, and that the same underwriter adjusts the preliminary price to establish the final offer price, based on its assessment of the institutional investors＇ motivations. Since the underwriter does not have discretionary power in new share allocation, this ＂Chinese-style＂ bookbuilding process contains certain pitfalls from an information asymmetry standpoint. The institutional investors mainly use ＂simple and direct＂ variables that do not adequately reflect the issuer＇s true intrinsic value to develop the preliminary price, while the underwriter adjusts that price downward to establish the offer price to clear the market, as a measure to counter a perceived free-rider issue among the institutional investors. This process, in effect, contributes to initial IPO underpricing and causes principal-agent conflicts between the underwriter and the issuer. We argue that such a pricing inefficiency could be improved by an innovative ＂bookbuilding plus price discretionary auction＂ process, which is a combination of the modified OpenlPO and Taiwan-style auctioned IPO approaches.展开更多
Linguistic specificity effectively reduces barriers to information cognition,increasing the efficiency of information acquisition,integration and processing.Combining the psycholinguistics theory of the concreteness e...Linguistic specificity effectively reduces barriers to information cognition,increasing the efficiency of information acquisition,integration and processing.Combining the psycholinguistics theory of the concreteness effect with assetpricing theory,we determine that linguistic specificity in the management discussion and analysis section of a firm’s annual reports is negatively associated with stock price synchronicity,particularly in firms with strong external information demand or insufficient information supply.Furthermore,only specificity of the review section leads to a reduction in stock price synchronicity.Mechanism tests show that specificity reduces information processing costs and enhances information credibility.Additionally,proprietary costs are an essential determinant of linguistic specificity adoption.Our findings suggest that linguistic specificity plays an essential role in improving market pricing efficiency.展开更多
文摘This paper examines what determines the offer price for a ChiNext IPO and discusses how we can improve the current ＂Chinese-style＂ bookbuilding process. We establish that the ChiNext IPO underwriter relies upon the institutional investors to discover the issuer＇s intrinsic value （in the form of a preliminary price）, and that the same underwriter adjusts the preliminary price to establish the final offer price, based on its assessment of the institutional investors＇ motivations. Since the underwriter does not have discretionary power in new share allocation, this ＂Chinese-style＂ bookbuilding process contains certain pitfalls from an information asymmetry standpoint. The institutional investors mainly use ＂simple and direct＂ variables that do not adequately reflect the issuer＇s true intrinsic value to develop the preliminary price, while the underwriter adjusts that price downward to establish the offer price to clear the market, as a measure to counter a perceived free-rider issue among the institutional investors. This process, in effect, contributes to initial IPO underpricing and causes principal-agent conflicts between the underwriter and the issuer. We argue that such a pricing inefficiency could be improved by an innovative ＂bookbuilding plus price discretionary auction＂ process, which is a combination of the modified OpenlPO and Taiwan-style auctioned IPO approaches.
基金funded by grants from the Major Program of National Fund of Philosophy and Social Science of China(No.18ZDA073)National Natural Science Foundation of China(No.71790602)
文摘Linguistic specificity effectively reduces barriers to information cognition,increasing the efficiency of information acquisition,integration and processing.Combining the psycholinguistics theory of the concreteness effect with assetpricing theory,we determine that linguistic specificity in the management discussion and analysis section of a firm’s annual reports is negatively associated with stock price synchronicity,particularly in firms with strong external information demand or insufficient information supply.Furthermore,only specificity of the review section leads to a reduction in stock price synchronicity.Mechanism tests show that specificity reduces information processing costs and enhances information credibility.Additionally,proprietary costs are an essential determinant of linguistic specificity adoption.Our findings suggest that linguistic specificity plays an essential role in improving market pricing efficiency.
