European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No DR 06001: Levels of voluntary disclosure in IPO prospectuses: an empirical analysis

Anne Cazavan-Jeny () and Thomas Jeanjean ()
Additional contact information
Anne Cazavan-Jeny: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 50105, 95021 CERGY-PONTOISE CEDEX, FRANCE
Thomas Jeanjean: HEC School of Management, Postal: 1 avenue de la Libération, 78351 JOUY-EN-JOSAS, FRANCE

Abstract: This paper focuses on how forecasts information is disclosed in IPO prospectuses. In France, managers report either detailed forecasts or only a brief summary. We investigate the determinants and consequences of the varying levels of detail provided in these forecasts. Based on a sample of 82 IPOs on the Euronext Paris market (2000-2002), we show that only two variables are associated with highly detailed forecast disclosures: forecast horizon and firm age. We also find that the forecast error decreases as the level of detail in the forecast disclosures increases. This finding is robust to our reverse causality test (Heckman two-stage self-selection procedure) and suggests that the level of detail in forecast disclosures enhances the reliability of earnings forecasts.

Keywords: IPO; Forecast disclosure; forecast error

JEL-codes: G14; G34; M41

41 pages, January 2006

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