The role of rhetorical modes in IPO firm uncertainty and performance
I examine how firm-level and industry-level uncertainty influence the rhetoric used in IPO prospectuses and then how investors respond to that rhetoric. I argue that organizations facing more firm-level and industry-level uncertainty will be more likely to justify and persuade investors through the rhetorical modes of pathos (emotional) and ethos (moral character) due to their lack of data, facts, and overall uncertainty. Firms that are more certain in their data, facts, and outcomes, will more likely justify and persuade using the rhetorical mode of logos (logic). Therefore, I propose that firm-level and industry-level uncertainty influence the rhetoric used by firms in IPO prospectuses. I also measure how investors respond from a contingency perspective, examining how the fit between rhetoric and uncertainty influences IPO performance.