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
Date Written: January 15, 2009
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: Suggested Citation