IPO Characteristics and Analyst Forecasts

46 Pages Posted: 13 Dec 2005

See all articles by Steven Xiaofan Zheng

Steven Xiaofan Zheng

University of Manitoba - Asper School of Business

David A. Stangeland

University of Manitoba - Department of Accounting and Finance

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

Zheng, Steven Xiaofan and Stangeland, David A., IPO Characteristics and Analyst Forecasts (December 2005). Available at SSRN: https://ssrn.com/abstract=869248 or http://dx.doi.org/10.2139/ssrn.869248

Steven Xiaofan Zheng (Contact Author)

University of Manitoba - Asper School of Business ( email )

Department of Accounting and Finance
Winnipeg, Manitoba R3T 5V4
Canada
204-474-7933 (Phone)

David A. Stangeland

University of Manitoba - Department of Accounting and Finance ( email )

Faculty of Management
Winnipeg, MB R3T 5V4
Canada
204-474-6743 (Phone)
204-474-7545 (Fax)

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