Can information transparency of company prospectus improve the price discovery efficiency under the registration system?

This study examines how the transparency of IPO prospectus disclosures influences price discovery efficiency under China’s registration-based system. Using data from firms listed on the Science and Technology Innovation Board, prospectus transparency is measured through textual analysis of disclosure content, while price discovery efficiency serves as a proxy for market informativeness. The results show that greater transparency significantly enhances price discovery efficiency. Mechanism tests reveal that this effect operates partly through increased attention from financial analysts and heightened media coverage, both of which accelerate the incorporation of firm-specific information into stock prices. The impact is more pronounced among firms with larger IPO financing scales and higher IPO winning rates, indicating that disclosure quality plays a stronger role when market participation is broader. Robustness checks—including median regression, variable substitution, and instrumental variable estimation—consistently confirm these findings.