Financial PR, Media Coverage And IPO Performance

With the development of modern media industry, media has been the link of companies, investors and the market for years. Mass media not only provides us with a variety of information, but it also guides public opinion, incites investor sentiment,affects the future expectations of investors.Ultimately, it acts on asset prices. Thus Chinese stock market is not yet mature ,while the homogeneity of institutional investors is serious,with the high proportion of individual investors and high degree of irrational market behavior.Under this context, we examine the reasons for differences of the number of different company's media coverage from the perspective of media information management,and as corporate's media information management methods ,we also examine the effect of financial public relations on media. Moreover, the paper further examines how media coverage and media tone influence the performance of the IPO market and the role of media coverage in it.This paper studied 1120 A-share listed companies during the period of 2006-2014 to examine the influence of media information management of IPO companies .Starting from the study of financial public relations , we find that: (1) financial publi relations behavior is very effective media information management way, having been contributed to the improvement of company's IPO media information environment . This media information management method has not only brought more media attention, more favorable media tone, but also has reduced the negative effects of company's reports. (2) good media information environment has spillover effects, it can be converted into better market performance. IPO information management media company attracts high media attention and positive tone of media coverage of the company ,and the first day IPO performance is more dazzling. It has improved IPO underpricing and turnover. (3) Financial public relations affect the IPO performance of the first day through the media reports, because media coverage is an intermediary variable, playing part of the intermediary effect.(4) the media information management can easily trigger emotion bubbles, because the possibility of overvaluing the stock price has greatly improved by it. The media coverage and positive media tone both negative correlated with long-term returns ,and the stock price after the IPO usually show price inversion phenomenon evidently.In summary, this article clarifies the mechanism of media information management from the perspective of behavioral finance. IPO companys handle the media through financial public relations. It is an effective way to increase the company's media attention and the positive impact of news events, to reduce the negative effect of negative news events,to seek recognition of the company's investment community and to increase their investor base. Thus,IPO company's media information management provides a solid guarantee for the successful IPO financing.