Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards

Recent literature on initial public offerings (IPOs) suggests a significant effect of tone in IPO underpricing but ignores its determinants. This study concentrates on the factors that shape the tone of the information disclosed in IPOs. Sampling 211 Latin American IPOs during the period 2000–2019,...

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Autores:
González Ferrero, Maximiliano
Guzmán Vásquez, Alexander
Téllez Falla, Diego Fernando
Trujillo Dávila , María Andrea
Tipo de recurso:
Article of investigation
Fecha de publicación:
2021
Institución:
Colegio de Estudios Superiores de Administración
Repositorio:
Repositorio CESA
Idioma:
eng
OAI Identifier:
oai:repository.cesa.edu.co:10726/5057
Acceso en línea:
http://hdl.handle.net/10726/5057
https://doi.org/10.1016/j.ribaf.2021.101481
Palabra clave:
Initial public offer
Text analysis
Information disclosure
Corporate governance
IPO valuation
Rights
License
Acceso Restringido
id CESA2_ccf2cbde4d115e1f864ce787fc53d1d5
oai_identifier_str oai:repository.cesa.edu.co:10726/5057
network_acronym_str CESA2
network_name_str Repositorio CESA
repository_id_str
spelling González Ferrero, Maximiliano6ed7fd26-b94e-4e41-8b5a-390d5ef46a5f600Guzmán Vásquez, Alexandere6815926-cc9f-40cd-bb0e-f549642805cf600Téllez Falla, Diego Fernando73192d46-1a72-4c82-9e37-f5b55205a208600Trujillo Dávila , María Andrea5b131e3f-c0dd-4f10-9a55-2909001129ad600González Ferrero, Maximiliano [0000-0002-8675-6911]Guzmán Vásquez, Alexander [0000-0001-7675-048X]Téllez Falla, Diego Fernando [0000-0002-1902-2870]Trujillo Dávila, María Andrea [0000-0002-9592-7890]González Ferrero, Maximiliano [17434254200]Guzmán Vásquez, Alexander [55207224400]Téllez Falla, Diego Fernando [57200984310]Trujillo Dávila, María Andrea [55206416700]2023-06-21T22:23:01Z2023-06-21T22:23:01Z2021-120275-5319http://hdl.handle.net/10726/5057instname:Colegio de Estudios Superiores de Administración – CESAreponame:Biblioteca Digital – CESArepourl:https://repository.cesa.edu.co/1878-3384https://doi.org/10.1016/j.ribaf.2021.101481engElsevier Inc.Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boardsarticlehttp://purl.org/coar/resource_type/c_2df8fbb1http://purl.org/coar/resource_type/c_6501info:eu-repo/semantics/articlehttp://purl.org/redcol/resource_type/ARThttp://purl.org/coar/version/c_71e4c1898caa6e32Acceso Restringidohttp://vocabularies.coar-repositories.org/access_rights/c_16ec/http://purl.org/coar/access_right/c_16ecRecent literature on initial public offerings (IPOs) suggests a significant effect of tone in IPO underpricing but ignores its determinants. This study concentrates on the factors that shape the tone of the information disclosed in IPOs. Sampling 211 Latin American IPOs during the period 2000–2019, we find empirical evidence that a powerful CEO can influence tone, avoiding unfavorable tone and fostering the use of positive words in the information disclosed to the market. We also show that more independent boards tend to use more unfavorable tones. Additionally, we find a non-monotonic relationship between board size and the tone in the prospectus, which suggests that an optimal board size mitigates the excessive use of positive tone and leads to more unfavorable tones in the IPO prospectus. Overall, well-functioning boards counterbalance powerful CEOs and generate more realistic disclosure to the market. Finally, we find that market-dominant auditors, age of the issuing firm, proposed use of proceeds, and the number of risk factors significantly affect the tone in the information disclosed.https://orcid.org/0000-0002-8675-6911https://orcid.org/0000-0001-7675-048Xhttps://orcid.org/0000-0002-1902-2870https://orcid.org/0000-0002-9592-7890https://www.scopus.com/authid/detail.uri?authorId=17434254200https://www.scopus.com/authid/detail.uri?authorId=55207224400https://www.scopus.com/authid/detail.uri?authorId=57200984310https://www.scopus.com/authid/detail.uri?authorId=5520641670058Research in International Business and FinanceInitial public offerText analysisInformation disclosureCorporate governanceIPO valuation10726/5057oai:repository.cesa.edu.co:10726/50572023-10-02 20:03:41.305metadata only accessBiblioteca Digital - CESAbiblioteca@cesa.edu.co
dc.title.eng.fl_str_mv Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
title Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
spellingShingle Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
Initial public offer
Text analysis
Information disclosure
Corporate governance
IPO valuation
title_short Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
title_full Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
title_fullStr Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
title_full_unstemmed Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
title_sort Determinants of corporate tone in an initial public offering : powerful CEOs versus well-functioning boards
dc.creator.fl_str_mv González Ferrero, Maximiliano
Guzmán Vásquez, Alexander
Téllez Falla, Diego Fernando
Trujillo Dávila , María Andrea
dc.contributor.author.spa.fl_str_mv González Ferrero, Maximiliano
Guzmán Vásquez, Alexander
Téllez Falla, Diego Fernando
Trujillo Dávila , María Andrea
dc.contributor.orcid.none.fl_str_mv González Ferrero, Maximiliano [0000-0002-8675-6911]
Guzmán Vásquez, Alexander [0000-0001-7675-048X]
Téllez Falla, Diego Fernando [0000-0002-1902-2870]
Trujillo Dávila, María Andrea [0000-0002-9592-7890]
dc.contributor.scopus.none.fl_str_mv González Ferrero, Maximiliano [17434254200]
Guzmán Vásquez, Alexander [55207224400]
Téllez Falla, Diego Fernando [57200984310]
Trujillo Dávila, María Andrea [55206416700]
dc.subject.proposal.none.fl_str_mv Initial public offer
Text analysis
Information disclosure
Corporate governance
IPO valuation
topic Initial public offer
Text analysis
Information disclosure
Corporate governance
IPO valuation
description Recent literature on initial public offerings (IPOs) suggests a significant effect of tone in IPO underpricing but ignores its determinants. This study concentrates on the factors that shape the tone of the information disclosed in IPOs. Sampling 211 Latin American IPOs during the period 2000–2019, we find empirical evidence that a powerful CEO can influence tone, avoiding unfavorable tone and fostering the use of positive words in the information disclosed to the market. We also show that more independent boards tend to use more unfavorable tones. Additionally, we find a non-monotonic relationship between board size and the tone in the prospectus, which suggests that an optimal board size mitigates the excessive use of positive tone and leads to more unfavorable tones in the IPO prospectus. Overall, well-functioning boards counterbalance powerful CEOs and generate more realistic disclosure to the market. Finally, we find that market-dominant auditors, age of the issuing firm, proposed use of proceeds, and the number of risk factors significantly affect the tone in the information disclosed.
publishDate 2021
dc.date.issued.none.fl_str_mv 2021-12
dc.date.accessioned.none.fl_str_mv 2023-06-21T22:23:01Z
dc.date.available.none.fl_str_mv 2023-06-21T22:23:01Z
dc.type.none.fl_str_mv article
dc.type.coar.fl_str_mv http://purl.org/coar/resource_type/c_6501
dc.type.coar.none.fl_str_mv http://purl.org/coar/resource_type/c_2df8fbb1
dc.type.driver.none.fl_str_mv info:eu-repo/semantics/article
dc.type.redcol.none.fl_str_mv http://purl.org/redcol/resource_type/ART
dc.type.coarversion.none.fl_str_mv http://purl.org/coar/version/c_71e4c1898caa6e32
format http://purl.org/coar/resource_type/c_2df8fbb1
dc.identifier.issn.none.fl_str_mv 0275-5319
dc.identifier.uri.none.fl_str_mv http://hdl.handle.net/10726/5057
dc.identifier.instname.none.fl_str_mv instname:Colegio de Estudios Superiores de Administración – CESA
dc.identifier.reponame.none.fl_str_mv reponame:Biblioteca Digital – CESA
dc.identifier.repourl.none.fl_str_mv repourl:https://repository.cesa.edu.co/
dc.identifier.eissn.none.fl_str_mv 1878-3384
dc.identifier.doi.none.fl_str_mv https://doi.org/10.1016/j.ribaf.2021.101481
identifier_str_mv 0275-5319
instname:Colegio de Estudios Superiores de Administración – CESA
reponame:Biblioteca Digital – CESA
repourl:https://repository.cesa.edu.co/
1878-3384
url http://hdl.handle.net/10726/5057
https://doi.org/10.1016/j.ribaf.2021.101481
dc.language.iso.none.fl_str_mv eng
language eng
dc.relation.citationvolume.none.fl_str_mv 58
dc.relation.ispartofjournal.none.fl_str_mv Research in International Business and Finance
dc.rights.coar.fl_str_mv http://purl.org/coar/access_right/c_16ec
dc.rights.local.none.fl_str_mv Acceso Restringido
dc.rights.coar.none.fl_str_mv http://vocabularies.coar-repositories.org/access_rights/c_16ec/
rights_invalid_str_mv Acceso Restringido
http://vocabularies.coar-repositories.org/access_rights/c_16ec/
http://purl.org/coar/access_right/c_16ec
dc.publisher.none.fl_str_mv Elsevier Inc.
publisher.none.fl_str_mv Elsevier Inc.
institution Colegio de Estudios Superiores de Administración
repository.name.fl_str_mv Biblioteca Digital - CESA
repository.mail.fl_str_mv biblioteca@cesa.edu.co
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