Voluntary Disclosure of Management Earnings Forecasts in Ipos and the Impact on Underpricing and Post - Issue Return Performance
38 Pages Posted: 13 Mar 1999
Date Written: February 15, 1999
Underpricing and post - issue return performance of Initial Public Offerings (IPOs) has long been a subject of extensive research and debate. While a variety of explanations for both have been put forward, asymmetric information between the owner/managers (insiders) and the investing public (outsiders) has factored as one of the main explanations. In this paper, we test for one mechanism designed to alleviate asymmetric information, namely, the voluntary disclosure of management earnings forecasts by issuers of IPOs. Our results indicate that the voluntary disclosure of forecasts has had a significant impact on both underpricing and post - issue return performance.
JEL Classification: G24, G34, G38, M41, M43
Suggested Citation: Suggested Citation