IPO and Financial News

This paper explores the relation between the sentiment of the media and IPOs underpricing which means whether the media were responsible for the phenomenal rise and fall in the market value of IPOs shares from 2010 to 2014. We focus on the effect of pre-IPOs media on the first day's return and we use sentiment analysis to calculate the media sentiment and use the sentimental words to classify the news. We found that the sentiment of media is significantly related to initial return. This paper also indicates significantly results that initial return is related to market return than sentiment of media in non-electronics industry. Furthermore, as our expected, the number of positive (negative) news has a positive (negative) influence on the initial return in the electronics industry.