Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Gounopoulos, Dimitrios

Volume 15, Numbers 3 & 4 / September/December , Pages 157-296

Multinational Finance Journal, 2011, vol. 15, no. 3/4, pp. 235-272

Dimitrios Gounopoulos , University of Surrey, U.K. Corresponding Author

Abstract:
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 : earnings forecast; IPO; accuracy of earnings; forecast error
View in Bib TeX Format View Cite Format 1 View Cite Format 2