The voluntary inclusion of earnings forecasts in IPO prospectuses*

Peter M. Clarkson · Alex K. Dontoh · Gordon D. Richardson · Stephan E. Sefcik

188 citations0/0 files storedContemporary Accounting Research

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Financial Markets and Investment Strategies Corporate Finance and Governance

Abstract

Abstract. This study examines empirically the role played by direct disclosure in the valuation of initial public offerings (IPOs). We investigate why some firms making an initial public offering in Canada include an earnings forecast in the offering prospectus and others do not, and, in particular, the role of such direct disclosures in IPO valuation. We explore several hypotheses motivated by the voluntary disclosure and signaling literatures. Our results are consistent with the hypotheses that (1) forecasters have “good news” to reveal about future earnings prospects relative to nonforecasters, (2) the earnings forecast signals are valuation relevant, and (3) the market is able to correct for expected forecast error or bias in the earnings forecast. Résumé. Les auteurs font une analyse empirique du rôle que joue la présentation directe d'information dans l'évaluation des premiers appels publics à lépargne. Ils se penchent sur les raisons pour lesquelles certaines sociétés qui font appel public à l'épargne au Canada intègrent à leur prospectus d'émission des prévisions de bénéfices, alors que d'autres ne le font pas, et ils s'intéressent en particulier au rôle de la présentation directe de ce genre d'information dans l'évaluation d'un premier appel public à l'épargne. Ils examinent plusieurs hypothèses inspirées d'ouvrages traitant de présentation volontaire d'information et d'indicateurs. Les résultats obtenus sont conformes aux hypothèses selon lesquelles 1) ceux qui font état de prévisions ont de l'information positive à communiquer au sujet des perspectives de bénéfices, contrairement à ceux qui ne font état d'aucune prévision, 2) les indicateurs que représentent les prévisions de bénéfices sont pertinents à l'évaluation et 3) le marché a la capacité de corriger l'information qu'il reçoit pour tenir compte des erreurs ou des distorsions anticipées dans les prévisions de bénéfices.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 188 citations exist upstream.

References

1977INFORMATIONAL ASYMMETRIES, FINANCIAL STRUCTURE, AND FINANCIAL INTERMEDIATION 1983Discretionary disclosure 1986Investment banking, reputation, and the underpricing of initial public offerings 1972The Market for Securities: Substitution Versus Price Pressure and the Effects of Information on Share Prices 1987On cross-sectional analysis in accounting research 1980An Empirical Investigation of the Voluntary Disclosure of Corporate Earnings Forecasts 1990Voluntary Forecast Disclosure, Nondisclosure, and Stock Prices 1982Signaling and the Valuation of Unseasoned New Issues

Cited by

2013Corporate Governance And Earnings Management: A Survey Of Literature 2007The determinants of forward‐looking information in annual reports of UAE companies 2003IPO Prospectus Information and Subsequent Performance 2003Voluntary Disclosure of Management Earnings Forecasts in IPO Prospectuses 2001Performance of Malaysian IPOs: Underwriters reputation and management earnings forecasts

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.