Abstract
Serious information asymmetry problems between new ventures and external stakeholders create room for misconduct behaviors. Therefore, finding clues that point to misconduct is very important. Drawing upon the theory of cognitive dissonance, in this article, we analyze whether and how entrepreneurs' facial expressions during initial public offering (IPO) roadshow presentations predict misconduct behaviors in the first year after IPO. Using a sample of Chinese firms listed in the growth enterprise market (GEM) from 2010 to 2015, we identify and quantify entrepreneurs' facial expressions during IPO roadshow presentations with the help of a facial expression recognition system-FaceReader 6.1. We find that facial expressions can help predict misconduct behaviors among new ventures to some extent. Specifically, we find a positive relationship between entrepreneurs' negative facial expressions and the possibility that new ventures engage in misconduct behaviors. In addition, we find that individual responsibility strengthens this relationship. Findings reveal the need to consider entrepreneurs' facial expressions during IPO roadshow presentations when predicting unethical behaviors among new ventures.
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