Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Multinational Finance Journal, 2011, vol 15, no 3/4, pp 235-272

38 Pages Posted: 2 Nov 2007 Last revised: 10 Jan 2014

Multiple version iconThere are 2 versions of this paper

Date Written: January 15, 2009

Abstract

This study examines the earnings forecast accuracy of newly listed companies on the Athens Stock Exchange and further investigates the relationship between earnings forecast and pricing of IPOs. It uses a unique data set of 208 IPOs, which were floated during the period of January 1994 to December 2001 in the Athens Stock Exchange. The results suggest that investors are able to anticipate forecast errors at the time of listing. Pricing of IPOs indicate that firms with negative earnings forecast (pessimistic) are associated with low level of underpricing while optimistic management earning forecast can be a signal for high initial returns. Three variables – age of the IPOs, ownership by insiders and industry classification significantly contribute towards accuracy of earnings forecast.

Keywords: Forecasts Accuracy (EFA), Absolute Forecasts Error (AFE), Superiority of Management Forecast (SUP), Initial Public Offerings (IPO), Athens Stock Exchange (ASE)

JEL Classification: C21, E4, G18, G32

Suggested Citation

Gounopoulos, Dimitrios, Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange (January 15, 2009). Multinational Finance Journal, 2011, vol 15, no 3/4, pp 235-272, Available at SSRN: https://ssrn.com/abstract=612225

Dimitrios Gounopoulos (Contact Author)

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

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