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IPO Pricing - Does prospectus disclosure matter?
Uppsala University, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Faculty of Social Sciences, Department of Business Studies.
Manuscript (Other academic)
URN: urn:nbn:se:uu:diva-94655OAI: oai:DiVA.org:uu-94655DiVA: diva2:168579
Available from: 2006-08-31 Created: 2006-08-31 Last updated: 2010-01-13Bibliographically approved
In thesis
1. Essays on Information Disclosure: Content, Consequence and Relevance
Open this publication in new window or tab >>Essays on Information Disclosure: Content, Consequence and Relevance
2006 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis provides new insight into the information environments of Initial Public Offerings (IPOs) and analysts’ equity reports. The thesis consists of four essays that address the issues of firm disclosure and the relevance of information for analysts and investors in the capital market. The research question concerns the role of accounting information on the capital market. The present thesis entails the following analyses:

(i) An analysis of the content in IPO prospectuses

(ii) Cross-sectional analyses on factors affecting prospectus disclosure

(iii) An analysis of the short- and long-run returns of IPOs

(iv) An analysis of the relevance of IPO disclosure on IPO valuation

(v) An analysis of non-financial information content in analysts’ reports

(vi) An analysis of the valuation relevance of non-financial information

The first essay examines prospectus disclosure and looks at explanations as to the factors that drive the disclosure. The findings reveal that IPO firms provide more information in their prospectus in comparison with non-IPO firms. The second essay analyzes how prospectus disclosure affects IPO valuation in the secondary market. It is hypothesized that increased disclosure in the prospectus decreases valuation uncertainty, which implicates lower underpricing for the IPO firm. The essay shows that Swedish IPOs are underpriced. However, disclosure is not found to be related to underpricing. The third essay examines the extent and type of forecasts provided in the prospectuses and the value relevance of this information. The study reveals a reduction in profit and sales forecast disclosures while at the same time shows an increase in sales growth forecasts for the period 1996-2004. The essay finds that forecast information is particularly relevant to investors and analysts. Forecast disclosing firms demonstrate a significantly lower underpricing and lower long-run return compared with non-forecast disclosing firms. The fourth essay concerns the valuation relevance of non-financial information contained in analysts’ equity reports. The essay notes that valuation relevance of non-financial information is positively related to the size of the target firm. Moreover, analysts were observed to rely more heavily on forward-looking non-financial information than historical non-financial information in their valuation.

Place, publisher, year, edition, pages
Uppsala: Företagsekonomiska institutionen, 2006. 47 p.
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 120
Business studies, IPO, prospectus, disclosure, valuation, underpricing, Företagsekonomi
urn:nbn:se:uu:diva-6988 (URN)
Public defence
2006-10-12, Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 13:15 (English)
Available from: 2006-08-31 Created: 2006-08-31 Last updated: 2009-04-20Bibliographically approved

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