The impact of disclosure characteristics of the registration statement for Science and Technology Innovation Board on the IPO underpricing

Abstract

The Science and Technology Innovation Board (STAR Market) registration statement is an important data source for investors to obtain information about listed companies. In this paper, we tend to analyze the impact of the registration statement on initial public offering (IPO) underpricing with six disclosure characteristics: Words, Boilerplate, Fog Index, HardInfoMix, Redundancy, and Specificity. In the empirical analysis, we collect registration statements of 193 listed companies from June 13, 2019 to January 31, 2021 in STAR Market. The empirical results show that the disclosure characteristics of Fog Index and Redundancy are positively associated with the IPO underpricing, while the impacts of Words and Boilerplate are the opposite. It indicates that a too-long registration statement or a registration statement using the phrases that are widely used by other companies in the same industry will lower the IPO underpricing. However, a more professional registration statement that is difficult to understand or a registration statement trying to emphasize the effective information repeatedly will make the IPO underpricing higher.