IPO Characteristics and Analyst Forecasts
46 Pages Posted: 13 Dec 2005
Date Written: December 2005
Abstract
In this paper we examine the relationship between IPO analyst forecasts and two key IPO characteristics: retention and underpricing. We find that analysts predict higher long-term growth rates for IPOs with higher retention and/or higher underpricing. Analysts revise their growth forecasts downward further for IPOs with higher underpricing. However, the annual earnings forecasts are less over-optimistic for these IPOs. Retention is positively related to actual growth in sales. Underpricing is positively related to actual growth rate in sales and EBITDA but not significantly related to actual growth in earnings.
Keywords: IPO, Underpricing, Retention, Analyst, Forecast
JEL Classification: G24, G30
Suggested Citation: Suggested Citation
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