Determinants of Management Earnings Forecasts: The Case of Global Shipping IPOs

Firms that go public on global stock markets are not obliged to disclose earnings forecasts in their prospectuses. We use this fact to examine the shipping industry, where most firms voluntarily issue earnings forecasts during the IPO process, thus providing unique, international‐level evidence. We...

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Bibliographic Details
Published in:European financial management : the journal of the European Financial Management Association 2017-11, Vol.23 (5), p.975-1015
Main Authors: Drobetz, Wolfgang, Gounopoulos, Dimitrios, Merika, Anna, Merikas, Andreas
Format: Article
Language:English
Subjects:
Accuracy
Earnings
Earnings forecasting
earnings management
forecast accuracy
Initial public offerings
IPOs
Leverage
Owners
Securities markets
Shipping industry
Stock exchanges
voluntary disclosure environment
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Summary:Firms that go public on global stock markets are not obliged to disclose earnings forecasts in their prospectuses. We use this fact to examine the shipping industry, where most firms voluntarily issue earnings forecasts during the IPO process, thus providing unique, international‐level evidence. We find overall pessimistic forecasts of ship owners, primarily because of the industry's uncertain and volatile environment. High ship owner participation after going public is associated with less accurate earnings forecasts. Our results further indicate that financial leverage, a listing in an emerging stock market, and global market conditions are other main factors responsible for inaccurate earnings forecasts.
ISSN:1354-7798
1468-036X
DOI:10.1111/eufm.12121