Study On The Discourse Structure Of Prospectus And Its Influence On Pricing

In recent years,with the reform and development of China’s capital market,in order to improve the value-oriented mechanism of the capital market,provide financing channels and incubation environment for some high-quality high-tech enterprises and new concept enterprises that have great development potential but cannot meet the conditions for continuous profitability and are not convenient for overseas listing,and promote high-quality economic development,China began to pilot the registration system of listing in 2019.The implementation of the registration system has relaxed the financial access threshold for the initial public offering of enterprises,and provided enterprises with the discretionary disclosure autonomy to demonstrate their "ability to continue operations".However,because the implementation of the registration system of listing has lowered the threshold for enterprises to be listed,the number of enterprises that choose to be listed for financing has increased.How to attract limited investors and valuable funds in the increasingly fierce market competition is becoming increasingly important.As an important medium for understanding corporate strategy,language is considered to have the outstanding ability to shape the business confidence of enterprises.Therefore,how to use language to convey the potential value of enterprises to investors and obtain more funds for development has become an emerging focus issue in academia.Based on the organizational semiotics framework,this paper explores the following three questions from three dimensions:pragmatics,semantics,and syntax:(1)Whether enterprises need to use different discourse strategies to make and give sense under different IPO systems.(2)How effective the sense making and sense giving of different discourse strategies in the prospectus is,that is,their impact on the pricing of IPO.(3)Under different IPO systems,how does the combination of the content and manner of narration in the prospectus affect investors,that is,how does the combination of pragmatics,semantics,and syntax affect investors.Through an empirical study of the discourse strategy of the prospectus of the Ashare IPO companies from January 2019 to December 2021 and its relationship with the inquiry price of institutional investors,this paper finds that:(1)due to the different types of enterprises targeted by the registration system and the approval system,the enterprises adopting the registration system for IPO are usually smaller than those adopting the approval system for IPO.The earnings stability of the former is poorer than the latter,and most of the former belong to emerging industries with more uncertainty and innovation.In the initial public offering prospectus,the former will describe more about their innovation,differentiation strategy,and future development,and use more causal words to do sense making and giving and attract investors.At the same time,since the enterprises that adopt the registration system for IPO are mostly innovative enterprises or emerging strategic enterprises and the risks they face are higher than those of the traditional industries that adopt the approval system for IPO,more risk prompts will also be provided in their prospectuses.In addition,for enterprises adopting the registration system for IPO,in order to make investors more aware of their own frontier,more professional explanations will be provided,which make the prospectus relatively less readable.However,under the two systems,there is no obvious difference in the description of the intonation and the costleading strategy in their prospectuses.(2)Adding the description of enterprise innovation,differentiation strategy and future development as well as positive tone in the prospectus of IPO can improve the inquiry price,help enterprises obtain better IPO pricing,and thus obtain more development funds,while readability will reduce the inquiry price.The use of costleading strategy description and causal logic words cannot have a significant impact on inquiry.(3)Moreover,different combinations of pragmatics,semantics and syntax will have different effects on the inquiry.The use of low-readability language in the prospectus of enterprises that have the conditions to adopt the registration system for initial public offering can improve the effectiveness of attracting investor by increasing the description of innovative contents,which has a positive relationship with the inquiry.Low-readability language can enhance the effect of describing less cost-leading strategy to investors,and the impact on inquiry is also positive.In the prospectus of enterprise that is qualified to adopt the approval system for initial public offering,although low readability can give investors the impression that the technology owned by the enterprise is very cutting-edge and professional,the use of language with low readability cannot change the negative impact of less positive tone,and the use of language with low readability and description of less positive information have a negative impact on investors.The use of language with lower readability and higher positive intonation can mutually enhance its positive impact on investors,so that these two dimensions that cannot have a significant positive impact on investors alone have a significant portfolio impact on investors.At the same time,the use of less causal language and higher positive intonation can also mutually enhance its positive impact on investors,but when the content is not positive,even if more causal logic language is used,providing more explanations will not have a good persuasive effect on investors,and will still have a significant negative impact on investors’ inquiry.The marginal contribution of this paper is mainly reflected in the following three aspects:Firstly,from the perspective of research content,this study supplements the research literature that enterprises will use different languages in different situations.At present,a large number of studies have shown that when enterprises faced different situations,enterprise managers will choose different languages to make relevant reports,but there is no study to explore whether there are differences in the use of language by enterprises in the different situations of registration system and approval system.Meanwhile,this study has expanded the research dimension of the language in the prospectus.The discussion of language is expanded from the readability and intonation of the prospectus to the language describing the enterprise innovation,differentiation strategy,cost-leading strategy,future development and the causal words.In addition,this study expands the research dimension of the role of language in communication from the single language dimension of semantics or syntax or the combination dimension of pragmatics and semantics,pragmatics and syntax to the combination dimension of pragmatics,semantics and syntax.At present,there are few studies on the comprehensive effect of the three dimensions of language in communication.Secondly,from the perspective of theoretical innovation,this paper attempts to use the theory of sense making and sense giving of organizational behavior to explore whether enterprises will choose to use different languages to influence investors in different situations.The current research on the use of different languages by enterprises in different situations is mainly based on the theory of corporate impression management,selective information disclosure and information asymmetry.This research will provide a new theoretical perspective for the research on the use of different languages by enterprises in different situations and its corresponding impact.Thirdly,from the perspective of measurement variables,this paper tries to use institutional inquiry to measure the attractiveness of IPO companies to investors.Due to the fact that the Chinese market is different from other markets,investors often do not have a thorough understanding of IPO companies but follow the trend of "strike new".The first day underpricing does not all depend on investors’ recognition of the company,but there is a speculative element in taking advantage of the IPO to earn underpricing,therefore,the use of the first-day underpricing situation cannot well measure the attractiveness of IPO companies to investors.The inquiry is quoted by institutional investors,which is the basis for setting the issue price.Compared with the overall market,institutional investors who are more professional will try to learn more about the situation of enterprises and conduct research on enterprises,thus using inquiry to measure the attractiveness of investors can better reflect the persuasiveness of language in addition to providing information.