Marketing Strategy After Meeting Wall Street: The Role of Information Asymmetry

Ma, Mingguo; Dewally, Michaël; Huang, Jian

doi:10.1111/jfir.12128

Cited by 12 publications

(19 citation statements)

References 61 publications

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“…Cao et al (2016) examine the effect of institutional bid dispersion, transaction volume and price fluctuations on IPO underpricing. Ma et al (2017) explore the relationship between pre-IPO marketing intensity and IPO underpricing. Massa and Zhang (2020) study how the heterogeneity in investment horizons of local institutional investors affects the IPO market.…”

Section: Literature Reviewmentioning

confidence: 99%

IPO underpricing and long-term performance in China: the perspective of price limit policy

Wang¹,

Wang²

2021

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PurposeThe purpose of this paper is to explore how the price limit policy implemented in 2014 affects initial public offering (IPO) underpricing and long-term performance in China.Design/methodology/approachThe data are the IPOs from Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) between 2004 and 2018. The data are firstly divided into the IPOs before the price limit policy and the IPOs after the price limit policy according to the time of issuance. Then the two groups are divided into 4 subsamples according to the market blocks and the P/E ratio. The authors use multiple regression models to explore the effect of price limit policy in each subsample.FindingsThe first-day price limit system for IPOs is similar to the upward fuse mechanism, the purpose of which is to suppress IPO underpricing. However, this study finds that the policy does not suppress IPO underpricing, but increases the underpricing rate in all subsamples. Besides, the long-term performance in each subsample is different from each other. Main Board stocks’ long-term performance is worse after the policy. The policy makes Small and Medium Enterprise Board (SME Board) and Growth Enterprise Market Board (GEM Board) stocks with high P/E ratios perform better in the long term. For SME Board and GEM Board stocks with low P/E ratios, the policy makes no significant effect.Practical implicationsGood policy intentions may sometimes lead to counterproductive effects. However, since the long-term performance of each subsample is different, it is difficult to judge whether the policy should continue to be implemented or cancelled. Implementing different policies for different subsamples may be a better way to solve this problem.Originality/valueThis paper contributes to the study of IPO underpricing and long-term performance from the perspective of price limit policy.

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Section: Literature Reviewmentioning

confidence: 99%

IPO underpricing and long-term performance in China: the perspective of price limit policy

Wang¹,

Wang²

2021

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“…For example, measures predicting proxy fight threats may themselves affect the outcomes of proxy fights or coincide with the overall industry or market trend that shifts the corporate policy. Similar issues have been widely seen in corporate finance and operation research, and require either a specification remedy or the theoretical modeling in addressing such issues (see, for example, Bansal, Joseph, Ma, & Wintoki, 2016, Ma, Dewally, & Huang, 2017, and Ma & Mallik, 2016. To overcome this issue, in this current research, we exploit the 2002 Sarbanes-Oxley Act as a quasi-natural experiment, around which the average corporate governance environment of U.S. public companies shifts towards conservative and less risk-taking, which is in a direction that is normally the opposite of demands pursued by activists.…”

Section: Introductionmentioning

confidence: 80%

Firm Risk and Proxy Fights: Evidence from SOX

Chen¹,

Huang²,

Yu³

2018

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The Sarbanes Oxley Act of 2002 (SOX) is documented to curb executive risk-taking and firm risk. Utilizing SOX as an exogenous shock on firm risk, we find that proxy fight threats are positively related to a firm’s total risk and idiosyncratic risk. Specifically, although firm risk generally decreases post-SOX, high proxy fight threats mitigate this change in firm risk. We also find that although firms adopt more conservative policies such as decreasing their leverage and payout post-SOX, these changes are mitigated by proxy fight threats. In sum, our findings indicate that proxy fights act as an external disciplinary mechanism, encourage executive risk-taking, and increase firm risk.

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“…Como a incerteza gera problemas de seleção adversa, as empresas com maior intensidade de investimentos podem realizar mais disclosure dos investimentos de marketing para reduzir a assimetria entre o agente e o principal. Ma et al (2017) constataram que a intensidade dos investimentos de marketing está relacionada à transparência das informações de empresas após IPO. Esses resultados positivos são esperados porque as empresas que investem mais em ativos de marketing (Srivastava et al, 1998) podem ter vantagens competitivas, priorizar a transparência e temer menos a concorrência (Mohamed & Schwienbacher, 2016).…”

Section: Intensidade Dos Investimentos De Marketingunclassified

“…(Stewart, 2009). Quanto maior é a divulgação das informações de marketing, com análises retrospectivas e prospectivas, menores são as incertezas dos investidores quanto ao futuro desempenho da firma (Joshi & Hanssens, 2010;Ma, Dewally, & Huang, 2017).…”

Section: Introdução Introduçãounclassified

“…Embora estudos anteriores terem mostrado que a intensidade dos investimentos de marketing instiga a percepção dos investidores porque aumenta o valor de mercado da firma (McIlkenny & Persaud, 2017) e impulsiona práticas de transparência (Ma et al, 2017), não há estudos na literatura sobre a influência da intensidade dos investimentos de marketing no nível de disclosure de marketing (ver Tabela 1). Outra limitação é que os poucos estudos sobre disclosure dos investimentos de marketing apenas consideraram informações de investimentos em propaganda (Edeling et al, 2020).…”

Section: Introdução Introduçãounclassified

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Informações dos Investimentos de Marketing: Recurso de Diferenciação ou Segredo?

2022

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Objective: drawing on voluntary disclosure theory, the paper’s main goal was to analyze the main effect of marketing intensity and the moderating role of life cycle on disclosure of marketing investments. Method: the sample includes 89 Brazilian companies listed on B3 stock exchange. We collected financial data from two sources, such as Economatica platform and in the explanatory notes and management report from the companies, which we coded through content analysis. We merged these two datasets and analyzed it using multiple linear regression. Results: both the marketing intensity and the life cycle of companies have effects on disclosure of marketing investments. In addition, the birth and growth phases moderate the main effect of marketing intensity, reducing the level of disclosure. This moderation is identified especially in disclosures of qualitative information. Conclusions: the findings support the voluntary disclosure theory based on arguments of judgment-based disclosure. Outcomes showed that when there is a high intensity of marketing investments, disclosure of marketing investments is managed by moving from the status of secrecy in companies in the birth and growth phases of life cycle to the status of differentiation resource in companies in the maturity phase of life cycle.

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Marketing Strategy After Meeting Wall Street: The Role of Information Asymmetry

Cited by 12 publications

References 61 publications

IPO underpricing and long-term performance in China: the perspective of price limit policy

IPO underpricing and long-term performance in China: the perspective of price limit policy

Firm Risk and Proxy Fights: Evidence from SOX

Informações dos Investimentos de Marketing: Recurso de Diferenciação ou Segredo?

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