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The voluntary inclusion of earnings forecasts in IPO prospectuses
. 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 rol...
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| Published in: | Contemporary accounting research 1992-04, Vol.8 (2), p.601-616 |
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| Main Authors: | , , , |
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| container_title | Contemporary accounting research |
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| creator | CLARKSON, PETER M. DONTOH, ALEX RICHARDSON, GORDON SEFCIK, STEPHAN E. |
| description | . 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. |
| doi_str_mv | 10.1111/j.1911-3846.1992.tb00863.x |
| format | article |
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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.</description><identifier>ISSN: 0823-9150</identifier><identifier>EISSN: 1911-3846</identifier><identifier>DOI: 10.1111/j.1911-3846.1992.tb00863.x</identifier><language>eng</language><publisher>Oxford, UK: Blackwell Publishing Ltd</publisher><subject>Disclosure ; Earnings ; Earnings forecasting ; Going public ; Initial public offerings ; Mathematical models ; Prospecti ; Statistical analysis ; Studies</subject><ispartof>Contemporary accounting research, 1992-04, Vol.8 (2), p.601-616</ispartof><rights>1992 Canadian Academic Accounting Association</rights><rights>Copyright Canadian Academic Accounting Association Spring 1992</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c3303-18559f5cbd5559f8e099ded03c43b3e92a46dbbd69e94a6318973bb2990fb4d63</citedby><cites>FETCH-LOGICAL-c3303-18559f5cbd5559f8e099ded03c43b3e92a46dbbd69e94a6318973bb2990fb4d63</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.proquest.com/docview/194215277/fulltextPDF?pq-origsite=primo$$EPDF$$P50$$Gproquest$$H</linktopdf><linktohtml>$$Uhttps://www.proquest.com/docview/194215277?pq-origsite=primo$$EHTML$$P50$$Gproquest$$H</linktohtml><link.rule.ids>315,786,790,11715,12874,27957,27958,33258,33259,36095,36096,44398,75252</link.rule.ids></links><search><creatorcontrib>CLARKSON, PETER M.</creatorcontrib><creatorcontrib>DONTOH, ALEX</creatorcontrib><creatorcontrib>RICHARDSON, GORDON</creatorcontrib><creatorcontrib>SEFCIK, STEPHAN E.</creatorcontrib><title>The voluntary inclusion of earnings forecasts in IPO prospectuses</title><title>Contemporary accounting research</title><description>. 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.</description><subject>Disclosure</subject><subject>Earnings</subject><subject>Earnings forecasting</subject><subject>Going public</subject><subject>Initial public offerings</subject><subject>Mathematical models</subject><subject>Prospecti</subject><subject>Statistical analysis</subject><subject>Studies</subject><issn>0823-9150</issn><issn>1911-3846</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1992</creationdate><recordtype>article</recordtype><sourceid>8BJ</sourceid><sourceid>M0C</sourceid><recordid>eNqVkMFPgzAYxRujiXP6P5AdvDFbWgr1Yiabc8nijJnx-AVKUZDBbEG3_94Slh282Utf8r33a7-H0IjgMbHnphgTQYhLQ8atEt64STAOOR3vTtDgODpFAxx61BXEx-fowpgCY8xZEA7QZP2hnO-6bKsm1nsnr2TZmryunDpzVKyrvHo3TlZrJWPTGDt3Fs8rZ6trs1WyaY0yl-gsi0ujrg73EL0-zNbRo7tczRfRZOlKSjF1Sej7IvNlkvqdCBUWIlUpppLRhCrhxYynSZJyoQSLOSWhCGiSeELgLGEpp0N03XPt41-tMg1sciNVWcaVqlsDNOhWFcwaR3-MRd3qyv4NiGAe8b0gsKbb3iTtKkarDLY639gKgGDoqoUCuv6gg0JXLRyqhZ0N3_Xhn7xU-38kIZq8zKyyBLcn5KZRuyMh1p_AAxr48PY0h_tphNky4jClv20Lj7U</recordid><startdate>19920401</startdate><enddate>19920401</enddate><creator>CLARKSON, PETER M.</creator><creator>DONTOH, ALEX</creator><creator>RICHARDSON, GORDON</creator><creator>SEFCIK, STEPHAN E.</creator><general>Blackwell Publishing Ltd</general><general>Canadian Academic Accounting Association</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X1</scope><scope>7XB</scope><scope>87Z</scope><scope>8A9</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>8FQ</scope><scope>8FV</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ANIOZ</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRAZJ</scope><scope>FRNLG</scope><scope>F~G</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PRINS</scope><scope>PYYUZ</scope><scope>Q9U</scope></search><sort><creationdate>19920401</creationdate><title>The voluntary inclusion of earnings forecasts in IPO prospectuses</title><author>CLARKSON, PETER M. ; DONTOH, ALEX ; RICHARDSON, GORDON ; SEFCIK, STEPHAN E.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c3303-18559f5cbd5559f8e099ded03c43b3e92a46dbbd69e94a6318973bb2990fb4d63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1992</creationdate><topic>Disclosure</topic><topic>Earnings</topic><topic>Earnings forecasting</topic><topic>Going public</topic><topic>Initial public offerings</topic><topic>Mathematical models</topic><topic>Prospecti</topic><topic>Statistical analysis</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>CLARKSON, PETER M.</creatorcontrib><creatorcontrib>DONTOH, ALEX</creatorcontrib><creatorcontrib>RICHARDSON, GORDON</creatorcontrib><creatorcontrib>SEFCIK, STEPHAN E.</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>ProQuest Central (Corporate)</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Accounting & Tax Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection</collection><collection>Accounting & Tax Database (Alumni Edition)</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>ProQuest Canadian Business & Current Affairs Database</collection><collection>Canadian Business & Current Affairs Database (Alumni Edition)</collection><collection>ProQuest Central (Alumni)</collection><collection>ProQuest Central</collection><collection>Accounting, Tax & Banking Collection (ProQuest)</collection><collection>AUTh Library subscriptions: ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>International Bibliography of the Social Sciences</collection><collection>Accounting, Tax & Banking Collection (Alumni)</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>International Bibliography of the Social Sciences</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Collection</collection><collection>One Business (ProQuest)</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central China</collection><collection>ABI/INFORM Collection China</collection><collection>ProQuest Central Basic</collection><jtitle>Contemporary accounting research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>CLARKSON, PETER M.</au><au>DONTOH, ALEX</au><au>RICHARDSON, GORDON</au><au>SEFCIK, STEPHAN E.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The voluntary inclusion of earnings forecasts in IPO prospectuses</atitle><jtitle>Contemporary accounting research</jtitle><date>1992-04-01</date><risdate>1992</risdate><volume>8</volume><issue>2</issue><spage>601</spage><epage>616</epage><pages>601-616</pages><issn>0823-9150</issn><eissn>1911-3846</eissn><notes>istex:485BD331C074CA27B58CB14A67D8C18E32E5D203</notes><notes>ark:/67375/WNG-BDC04LC6-D</notes><notes>The authors would like to thank the following individuals for helpful comments on earlier versions of this manuscript: R. Abdel-khalik, R. Beatty, G. Feltham, J. Hughes, P. Hughes, D. Kennedy, R. Ramanon, W.R. Scott, and R. Thompson. Comments from Workshops at The University of North Carolina, The University of Waterloo, The University of British Columbia, The University of Washington, Simon Fraser University, and New York University, and from the Canadian Academic Accounting Association 1989 Annual Conference and the 1989 Internation Forecasting Symposium, and the American Accounting Association 1990</notes><notes>ArticleID:CARE863</notes><notes>The authors would like to thank the following individuals for helpful comments on earlier versions of this manuscript: R. Abdel‐khalik, R. Beatty, G. Feltham, J. Hughes, P. Hughes, D. Kennedy, R. Ramanon, W.R. Scott, and R. Thompson. Comments from Workshops at The University of North Carolina, The University of Waterloo, The University of British Columbia, The University of Washington, Simon Fraser University, and New York University, and from the Canadian Academic Accounting Association 1989 Annual Conference and the 1989 Internation Forecasting Symposium, and the American Accounting Association 1990</notes><notes>ObjectType-Article-2</notes><notes>SourceType-Scholarly Journals-1</notes><notes>ObjectType-Feature-1</notes><notes>content type line 23</notes><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.</abstract><cop>Oxford, UK</cop><pub>Blackwell Publishing Ltd</pub><doi>10.1111/j.1911-3846.1992.tb00863.x</doi><tpages>16</tpages></addata></record> |
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| ispartof | Contemporary accounting research, 1992-04, Vol.8 (2), p.601-616 |
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| source | International Bibliography of the Social Sciences (IBSS); ABI/INFORM Collection; BSC - Ebsco (Business Source Ultimate) |
| subjects | Disclosure Earnings Earnings forecasting Going public Initial public offerings Mathematical models Prospecti Statistical analysis Studies |
| title | The voluntary inclusion of earnings forecasts in IPO prospectuses |
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