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IPO Forecasts
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PRESENTATION OUTLINE
1.
IPO FORECAST ERRORS
ZHUANG, CHEN & HAY
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kiwinz
2.
DH
3.
IPO FORECAST ERRORS AND MANDATORY EXPLANATIONS
EVIDENCE FROM NEW ZEALAND
4.
OVERVIEW
Forecasts are still inaccurate but unbiased
Voluntary negative assurance associated with more accuracy
Bigger variations: fewer explanations
5.
QUESTION
HOW ACCURATE ARE IPO PROSPECTUS FORECASTS?
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Jason_Bowler
6.
IMPORTANCE
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woo is not a china girl
7.
WHY?
Previous studies: NZ IPO forecasts are very inaccurate
Recent evidence
Features of New Zealand
8.
SPECIAL FEATURES IN NZ
REQUIRED FORECASTS; REQUIRED EXPLANATIONS; VOLUNTARY NEGATIVE ASSURANCE
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paul bica
9.
NZ IPO FORECASTS
Required forecast (1983)
Required explanation of variations (FRS-42, 2006)
Voluntary negative assurance
10.
Studies of Forecast Variance
28 STUDIES; VOLUNTARY OR REQUIRED; LARGE VARIANCES
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Mr.Tea
11.
TABLE 1
Considerable inaccuracy and bias
Generally more optimistic (underachieve forecast)
Required forecasts do not appear to be more inaccurate
12.
HYPOTHESES
NZ IPOs are inaccurate
NZ IPOs are biased
13.
HYPOTHESES
Negative assurance, more accurate
More management explanations for large errors
More management explanations for negative errors
Negative forecast errors beyond management control
14.
AFE and FE
AFE = |A-F|/|F|; FE = (A-F)/|F|
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kevin dooley
15.
RESEARCH DESIGN
SIGN TEST; OLS
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sickmouthy
16.
OLS MODELS
17.
OLS MODELS
Forecast error in earnings, revenue, cashflow
Number of explanations
Negative assurance
Controlling for auditor, age forecast horizon, leverage, size, GFC, cross-listing
18.
DATA
EARNINGS, REVENUES, CASH FLOW, 2006-14
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ckhamken
19.
TABLE 2
20.
TABLE 4, 6, 7
21.
RESULTS
INACCURATE; UNBIASED
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Ferruccio Berti
22.
FURTHER RESULTS
Negative assurance: more accurate
Larger errors: fewer explanations
Larger positive or negative errors: fewer external explanations
23.
IMPLICATIONS
BENEFITS OF NEGATIVE ASSURANCE
24.
ISSUES
25.
TO RESOLVE
More background
Pre-2006
Explanations for revenue and cashflows
Why fewer explanations for larger errors?
Market reaction to errors
David Hay
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