Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations
This paper seeks to answer the questions concerning the current level of bias and accuracy associated with the IPO earnings forecasts and the explanations behind forecasts errors.Using 190 Malaysian IPOs, we found that the Malaysian IPO earnings forecasts during the period of study (2002-2012) were...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Canadian Center of Science and Education
2014
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| Online Access: | https://repo.uum.edu.my/id/eprint/18723/1/ASS%2011%203%202015%2068-77.pdf |
| _version_ | 1803627589832540160 |
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| author | Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin |
| author_facet | Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin |
| author_sort | Ammer, Mohammed Abdullah |
| collection | UUM |
| description | This paper seeks to answer the questions concerning the current level of bias and accuracy associated with the IPO earnings forecasts and the explanations behind forecasts errors.Using 190 Malaysian IPOs, we found that the Malaysian IPO earnings forecasts during the period of study (2002-2012) were pessimistic (i.e., the earnings
forecasts were underestimated), proposing that Malaysian IPO directors are, averagely unbiased and cautious forecasters.Moreover, we found the percentage of accuracy of Malaysian IPO earnings forecasts to be unsatisfactory.However, the percentage shows some improvement for the accuracy of earnings forecasts over time.Further, content analysis was used to explore the explanations provided behind the forecasts errors.This study found that, the number of provided explanations in first published annual report of IPO company was
greater when the management of IPO companies were more optimistic in making their earnings forecasts (i.e., the earnings forecasts were over forecasted) and when the forecasts errors were large.These results have implications for the capital market participants like regulators and investors. |
| first_indexed | 2024-07-04T06:08:28Z |
| format | Article |
| id | uum-18723 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:08:28Z |
| publishDate | 2014 |
| publisher | Canadian Center of Science and Education |
| record_format | dspace |
| spelling | uum-187232016-10-04T01:48:43Z https://repo.uum.edu.my/id/eprint/18723/ Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin HC Economic History and Conditions This paper seeks to answer the questions concerning the current level of bias and accuracy associated with the IPO earnings forecasts and the explanations behind forecasts errors.Using 190 Malaysian IPOs, we found that the Malaysian IPO earnings forecasts during the period of study (2002-2012) were pessimistic (i.e., the earnings forecasts were underestimated), proposing that Malaysian IPO directors are, averagely unbiased and cautious forecasters.Moreover, we found the percentage of accuracy of Malaysian IPO earnings forecasts to be unsatisfactory.However, the percentage shows some improvement for the accuracy of earnings forecasts over time.Further, content analysis was used to explore the explanations provided behind the forecasts errors.This study found that, the number of provided explanations in first published annual report of IPO company was greater when the management of IPO companies were more optimistic in making their earnings forecasts (i.e., the earnings forecasts were over forecasted) and when the forecasts errors were large.These results have implications for the capital market participants like regulators and investors. Canadian Center of Science and Education 2014 Article PeerReviewed application/pdf en cc_by https://repo.uum.edu.my/id/eprint/18723/1/ASS%2011%203%202015%2068-77.pdf Ammer, Mohammed Abdullah and Ahmad Zaluki, Nurwati Ashikkin (2014) Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations. Asian Social Science, 11 (3). pp. 68-77. ISSN 1911-2017 http://doi.org/10.5539/ass.v11n3p68 doi:10.5539/ass.v11n3p68 doi:10.5539/ass.v11n3p68 |
| spellingShingle | HC Economic History and Conditions Ammer, Mohammed Abdullah Ahmad Zaluki, Nurwati Ashikkin Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title | Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title_full | Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title_fullStr | Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title_full_unstemmed | Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title_short | Earnings forecasts errors in Malaysian IPO prospectuses: Evidence and explanations |
| title_sort | earnings forecasts errors in malaysian ipo prospectuses evidence and explanations |
| topic | HC Economic History and Conditions |
| url | https://repo.uum.edu.my/id/eprint/18723/1/ASS%2011%203%202015%2068-77.pdf |
| work_keys_str_mv | AT ammermohammedabdullah earningsforecastserrorsinmalaysianipoprospectusesevidenceandexplanations AT ahmadzalukinurwatiashikkin earningsforecastserrorsinmalaysianipoprospectusesevidenceandexplanations |