- Wawryszuk-Misztal Anna (Maria Curie-Skłodowska University in Lublin)
- Earnings Forecasts Errors in Prospectuses : Evidence from Initial Public Offerings on the Warsaw Stock Exchange
- Equilibrium, 2017, vol. 12, nr 2, s. 229-243, aneks, bibliogr. 25 poz.
- Słowa kluczowe
- Pierwsza oferta publiczna, Prognozowanie, Giełda papierów wartościowych
Initial Public Offering (IPO), Forecasting, Stock market
- Klasyfikacja JEL: G10, G32, G39
- Giełda Papierów Wartościowych w Warszawie
Warsaw Stock Exchange
- Research background: Several studies investigated the issue of accuracy of earnings forecasts disclosed in IPO prospectus because of its importance in the investor's decisions. Disclosing earnings forecasts can reduce information asymmetry and encourage potential investors to buy offered shares. The accuracy of earnings forecasts, and especially its determinants, was explored by some researchers, but for Polish companies such studies have not been conducted.
Purpose of the article: The first objective of this study is to examine the bias and accuracy of earnings forecasts disclosed in IPO prospectuses by Polish companies attempting to be listed on the main market of the Warsaw Stock Exchange. The second aim of this paper is to identify the relationship between the absolute forecast error employed as a measure of earnings forecast accuracy and a number of company specific characteristics such as company's size, leverage, forecast horizon, managerial ownership, number of shares offered to investors (in relation to total shares before IPO).
Methods: The empirical analysis were conducted on a sample of 102 domestic companies that performed IPOs on the main market of the Warsaw Stock Exchange during 2006-2015 and disclosed earnings forecasts in IPO prospectus. The forecast error (FER) and absolute forecast error (AFER) were adopted as a measure of accuracy of earnings forecasts. The parametric and non-parametric tests and multiple regression model were employed to achieve the adopted aims.
Findings & Value added: The results show that, on average, the forecasted earnings exceed the actual earnings (i.e. the earnings forecasts are optimistic) and forecasts are inaccurate. Moreover, the optimistic forecasts are more inaccurate than pessimistic ones. The findings of multiple regression model show that three independent variables may affect the level of absolute forecast error: the company's size, managerial ownership and forecast horizon. (original abstract)
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