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Do markets value manager-investor interaction quality? Evidence from IPO returns

Author

Listed:
  • Shibo Bian

    (Shanghai University of Finance and Economics)

  • Iftekhar Hasan

    (Fordham University
    Bank of Finland
    University of Sydney)

  • Xunxiao Wang

    (Shanghai University of Finance and Economics)

  • Zhipeng Yan

    (Shanghai Jiao Tong University)

Abstract

This paper investigates the impact of manager-investor interaction quality on stock returns by utilizing an online IPO roadshow dataset and leveraging a word-embedding model. We find that such interactions are positively valued, as reflected in initial returns. The effect is particularly pronounced for firms characterized by higher levels of information asymmetry, greater investor attention, increased question uncertainty, or discussions on topics not covered in prospectus. Additionally, our research reveals that effective management communication leads to increased first-day turnover rates and thus higher returns. These heightened returns persist up to 180 days following the IPO, without displaying a significant long-term reversal associated with interaction quality. These findings underscore the meaningful impact of the quality of manager-investor interactions on firm valuation.

Suggested Citation

  • Shibo Bian & Iftekhar Hasan & Xunxiao Wang & Zhipeng Yan, 2024. "Do markets value manager-investor interaction quality? Evidence from IPO returns," Review of Quantitative Finance and Accounting, Springer, vol. 63(2), pages 599-632, August.
    • Handle: RePEc:kap:rqfnac:v:63:y:2024:i:2:d:10.1007_s11156-024-01267-3
    DOI: 10.1007/s11156-024-01267-3
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    More about this item

    Keywords

    Online roadshow; Manager-investor interactions; Initial returns;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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