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On the Association between IPO Anomalies and Management Forecasts
Lin, Hsiou-wei William
mandatory (voluntary) management forecasts;under-pricing
|Issue Date:||2017-11-15 14:52:57 (UTC+8)|
In 1991, Taiwan Stock Exchange mandated all initial public offering (IPO) firms to include their management forecasts in the prospectuses. This study explores the association between the 1991 disclosure rules and the IPO anomalies including positive abnormal returns accompanying the IPOs and the subsequent price reversals. Specifically, we partition our IPO observations during the test period based on the existence and the type of management forecasts. Our results support the notion that disclosure regulations help mitigating both information asymmetry and investors' overreaction. First, the post-1991 IPOs are significantly less under-priced. Second, consistent with the cheap talk hypothesis, the pre-1991 IPOs with voluntary earnings forecasts appear to be subject to greater under-pricing as opposed to the observations without management forecasts. Third, the magnitude of subsequent price reversal appears to be greater (less) for the pre- (post-) 1991 IPOs. Fourth, the duration of the under-pricing period for the post-1991 (pre-1991) IPOs appears to be longer (shorter). On the other hand, the duration of the under-pricing period for the pre-1991 IPOs with (with no) voluntary disclosures appears to be longer (shorter).
|Relation:||會計評論, 34, 31-56|
|Appears in Collections:||[會計評論] 期刊論文|
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