Skip to main content
SpringerLink
Log in
Book cover

Asian Conference on Intelligent Information and Database Systems

ACIIDS 2016: Intelligent Information and Database Systems pp 346–353Cite as

IPO and Financial News

  • Conference paper

  • 1583 Accesses

Part of the book series: Lecture Notes in Computer Science ((LNAI,volume 9622))

Abstract

This paper explores the relation between the sentiment of the media and IPOs underpricing which means whether the media were responsible for the phenomenal rise and fall in the market value of IPOs shares from 2010 to 2014. We focus on the effect of pre-IPOs media on the first day’s return and we use sentiment analysis to calculate the media sentiment and use the sentimental words to classify the news. We found that the sentiment of media is significantly related to initial return. This paper also indicates significantly results that initial return is related to market return than sentiment of media in non-electronics industry. Furthermore, as our expected, the number of positive (negative) news has a positive (negative) influence on the initial return in the electronics industry.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    https://en.wikipedia.org/wiki/Initial_public_offering.

  2. 2.

    Knowledge Management Winner, http://kmw.chinatimes.com/.

  3. 3.

    Biotechnology & medical care, optoelectronic, electronic parts & components, semiconductor, communications & Internet, electric machinery, electronics & peripheral equipment, information service, tourism, other electronic, trading and consumers’ goods, shipping & transportation, chemical, cultural & creative, textiles, building material & construction, plastics, electrical & cable, iron & steel, automobile, glass & ceramics, foods, electronic products distribution, other.

  4. 4.

    News that is considered to have a positive (negative) impact on IPO firms. News is considered to have a trivial impact is classified as neutral news.

  5. 5.

    Electronics: 106 and Non-electronics: 133.

  6. 6.

    TW1: pre-IPO period, TW2: one month prior to the issue day.

References

  1. Allen, F., Faulhaber, G.R.: Signaling by underpricing in the IPO Market. J. Financ. Econ. 23(2), 303–323 (1989)

    Article  Google Scholar 

  2. Arbel, A., Strebel, P.: Pay attention to neglected firms!*. J. Portfolio Manag. 9(2), 37–42 (1983)

    Article  Google Scholar 

  3. Azar, P.D.: Sentiment Analysis in Financial News, Harvard University (2009)

    Google Scholar 

  4. Baker, M., Stein, J.C., Wurgler, J.: When does the market matter? stock prices and the investment of equity-dependent firms. Q. J. Econ. 118(3), 969–1005 (2002)

    Article  MATH  Google Scholar 

  5. Barber, B.M., Odean, T.: All that glitters: the effect of attention and news on the buying behavior of individual and institutional investors. Rev. Financ. Stud. 21(2), 785–818 (2008)

    Article  Google Scholar 

  6. Baron, D.P.: A model of the demand for investment banking advising and distribution services for new issues. J. Finan. 37(4), 955–976 (1982)

    Article  MathSciNet  Google Scholar 

  7. Bautin, M., Vijayarenu, L., Skiena, S.: International sentiment analysis for news and blogs. In: Proceedings of the International Conference on Weblogs and Social Media (2008)

    Google Scholar 

  8. Beatty, R.P., Ritter, J.R.: Investment banking, reputation, and the underpricing of initial public offerings. J. Finan. Econ. 15(1), 213–232 (1986)

    Article  Google Scholar 

  9. Benveniste, L.M., Spindt, P.A.: How investment bankers determine the offer price and allocation of new issues. J. Financ. Econ. 24(2), 343–361 (1989)

    Article  Google Scholar 

  10. Benveniste, L.M., Wilhelm, W.J.: A comparative analysis of IPO proceeds under alternative regulatory environments. J. Financ. Econ. 28(1), 173–207 (1990)

    Article  Google Scholar 

  11. Cook, D.O., Kieschnick, R., Van Ness, R.A.: On the marketing of IPOs. J. Financ. Econ. 82(1), 35–61 (2006)

    Article  Google Scholar 

  12. Davis, A.K., Piger, J.M., Sedor, L.M.: Beyond the Numbers: An Analysis of Optimistic and Pessimistic Language in Earnings Press Releases (2006)

    Google Scholar 

  13. Degeorge, F., Derrien, F., Womack, K.L.: Quid Pro Quo in IPOs: Why Book-Building is Dominating Auctions (2004)

    Google Scholar 

  14. Derrien, F.: IPO pricing in “Hot” market conditions: Who leaves money on the table? J. Finan. 60(1), 487–521 (2005)

    Article  Google Scholar 

  15. Frieder, L., Subrahmanyam, A.: Brand perceptions and the market for common stock. J. Finan. Quant. Anal. 40(1), 57–85 (2005)

    Article  Google Scholar 

  16. Godbole, N., Srinivasaiah, M., Skiena, S.: Large-scale sentiment analysis for news and blogs. In: International Conference on Weblogs and Social Media (ICWSM 2007), Denver CO, 26-28 March 2007 (2007)

    Google Scholar 

  17. Grinblatt, M., Hwang, C.Y.: Signalling and the pricing of new issues. J. Finan. 44(2), 393–420 (1989)

    Article  Google Scholar 

  18. Henry, E.: Are investors influenced by how earnings press releases are written? J. Bus. Commun. 45(4), 363–407 (2008)

    Article  Google Scholar 

  19. Lin, I.H., Chen, K.T.: Creating and Verifying Sentiment Dictionary of Finance and Economics via Financial News (2013)

    Google Scholar 

  20. Liu, L.X., Sherman, A.E., Zhang, Y.: Media Coverage and IPO Underpricing (2009)

    Google Scholar 

  21. Ljungqvist, A., Nanda, V., Singh, R.: Hot markets, investor sentiment, and IPO pricing. J. Bus. 79(4), 1667–1702 (2006)

    Article  Google Scholar 

  22. Logue, D.E.: On the pricing of unseasoned equity issues: 1965–1969. J. Finan. Quant. Anal. 8(1), 91–103 (1973)

    Article  Google Scholar 

  23. Lowry, M., Schwert, G.W.: Is the IPO pricing process efficient? J. Finan. Econ. 71(1), 3–26 (2004)

    Article  Google Scholar 

  24. Miller, G.A., Beckwith, R., Fellbum, C., Gross, D., Miller, K.J.: Introduction to WordNet: an On-line lexical database. Int. J. Lexicography 3(4), 235–312 (1990)

    Article  Google Scholar 

  25. Morck, R., Yeung, B., Yu, W.: The information content of stock markets: Why do emerging markets have synchronous stock price movements? J. Finan. Econ. 58(1), 215–260 (2000)

    Article  Google Scholar 

  26. Nasukawa, T., Yi, J.: Sentiment analysis: Capturing favorability using natural language processing. In: Proceedings of the 2nd International Conference on Knowledge Capture, pp. 70–77 (2003)

    Google Scholar 

  27. Neal, R., Wheatley, S.M.: Do measures of investor sentiment predict returns? J. Finan. Quant. Anal. 33(4), 523–547 (1998)

    Article  Google Scholar 

  28. Rock, K.: Why new issues are underpriced. J. Finan. Econ. 15(1–2), 187–212 (1986)

    Article  Google Scholar 

  29. Sherman, A.E., Titman, S.: Building the IPO order book: underpricing and participation limits with costly information. J. Finan. Econ. 65(1), 3–29 (2002)

    Article  Google Scholar 

  30. Tetlock, P.C.: Giving content to investor sentiment: the role of media in the stock market. J. Finan. 62(3), 1139–1168 (2007)

    Article  Google Scholar 

  31. Trauten, A., Langer, T.: Information production and bidding in IPOs: an experimental analysis of auctions and fixed-price offerings. Zeitschrift für Betriebswirtschaft 82(4), 361–388 (2012)

    Article  Google Scholar 

  32. Welch, I.: Seasoned offerings, imitation costs, and the underpricing of initial public offerings. J. Finan. 44(2), 421–449 (1989)

    Article  MathSciNet  Google Scholar 

  33. Yi, J., Nasukawa, T., Bunescu, R., Niblack, W.: Sentiment analyzer: extracting sentiments about a given topic using natural language processing techniques. In: Third IEEE International Conference on Data Mining (ICDM), pp. 427–434 (2003)

    Google Scholar 

Download references

Acknowledgement

This research is supported by NSC 102-2627-E-004 -001, MOST 103-2627-E-004 -001, MOST 104-2627-E-004-001.

Author information

Authors and Affiliations

  1. Department of Accounting, College of Commerce, National Chengechi University, Taipei, 11605, Taiwan, ROC

    Jia-Lang Seng, Pi-Hua Yang & Hsiao-Fang Yang

Authors
  1. Jia-Lang Seng
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Pi-Hua Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Hsiao-Fang Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jia-Lang Seng .

Editor information

Editors and Affiliations

  1. Wrocław University of Technology, Wrocław, Poland

    Ngoc Thanh Nguyen

  2. Wrocław University of Technology, Wrocław, Poland

    Bogdan Trawiński

  3. Iwate Prefectural University, Takizawa, Japan

    Hamido Fujita

  4. National University of Kaohsiung, Kaohsiung, Taiwan

    Tzung-Pei Hong

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer-Verlag Berlin Heidelberg

About this paper

Cite this paper

Seng, JL., Yang, PH., Yang, HF. (2016). IPO and Financial News. In: Nguyen, N.T., Trawiński, B., Fujita, H., Hong, TP. (eds) Intelligent Information and Database Systems. ACIIDS 2016. Lecture Notes in Computer Science(), vol 9622. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-49390-8_34

Download citation

  • DOI: https://doi.org/10.1007/978-3-662-49390-8_34

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-662-49389-2

  • Online ISBN: 978-3-662-49390-8

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics

Search

Navigation