An empirical investigation of volutary disclosure of earnings forecasts in initial public offering prospectuses

Nuamah, Charles. (1995). An empirical investigation of volutary disclosure of earnings forecasts in initial public offering prospectuses Master's Thesis, Dept. of Economics, The University of Queensland.

       
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Author Nuamah, Charles.
Thesis Title An empirical investigation of volutary disclosure of earnings forecasts in initial public offering prospectuses
School, Centre or Institute Dept. of Economics
Institution The University of Queensland
Publication date 1995
Thesis type Master's Thesis
Total pages 99
Language eng
Subjects 1402 Applied Economics
Formatted abstract This study examines the economic determinants of the voluntary disclosure of earnings forecasts in prospectuses for initial public offerings. The role played by such disclosure in the valuation of the new issues is also examined. The study explores several hypotheses motivated by the voluntary disclosure and the signalling literature. The results indicate initial offering firms' disclosure policy is influenced by a number of factors including: operating history of the firm; proprietary costs; and auditor quality. The results further indicate that the mere act of disclosure of forecasts in the prospectus itself does not convey information to the market, it is the nature of the information contained in the forecast which signals firm value to the market. The study also reveals that investors perceive the percentage of equity retained by pre-offering owners as a credible signal of firm value. The results in relation to the 'good news' hypothesis (which posits that firms with superior cash flow prospects will disclose to screen themselves from firms with 'worse' information); and costs of capital (competition in the capital market) were inconclusive. Finally, the evidence indicates that issue size and firm size have poor explanatory power in relation to new equity issuers' disclosure policy.

 
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