Views
5 years ago

IPO performance and earnings expectations: some French evidence

IPO performance and earnings expectations: some French evidence

Table 7 Long term

Table 7 Long term performance and Forecast Errors Panel A: AR= α+ β*PFE+ε by period. Earnings forecasts come from pre-IPO prospectuses. Actual earnings per share are taken from the I/B/E/S consensus database. Prospectus Forecast Errors (PFE) are calculated using the following formula: PFE = (actual EPS – Prospectus EPS forecast) / IPO price. AR is equal to the long-term comparison portfolio-adjusted Cumulated Average Return over the period starting on IPO date + 10 trading days and ending on fiscal year end + 5 months. Panels B and C: AR= α+ β*AFE+ ε by period and by analyst affiliation. Earnings forecasts come from the I/B/E/S analyst-by-analyst historical earnings estimate database. For each IPO firm, we take every analyst’s first earning forecast issued before the offering or within the 12-month subsequent period if no earnings announcement has taken place between the IPO and the forecast. For both panels, actual earnings per share are taken from the I/B/E/S consensus database. Analyst Forecast Errors (AFE) are calculated using the following formula: AFE = (actual EPS – analyst EPS forecast) / Stock price at forecast date. AR is calculated like in Panel A. In the “All observations” table, all observations are given the same weight. In the “By firm” table, each firm is assigned one AFE value and one AR value, equal to the mean of the analyst-by-analyst individual AFE and AR respectively. In Panel C, affiliation refers to the status of the analyst who produced a given observation. It is equal to: - 1 if the analyst who produced the forecast is affiliated with the lead underwriter of the deal and no other forecast was issued for this firm / year, - 2 if the analyst who produced the forecast is affiliated with the lead underwriter of the deal and other forecasts were issued by non-affiliated analysts for this firm / year, - 3 if the analyst who produced the forecast is not affiliated with the lead underwriter of the deal and an affiliated analyst issued a forecast for this firm / year, - 4 if the analyst who produced the forecast is not affiliated with the lead underwriter of the deal and no a forecast was issued by an affiliated analyst for this firm / year. In panels A and B, year 1 (and respectively, year 2, year 3), is the next (and respectively, second next, third next) fiscal year for which earnings per share are announced. White-consistent t-statistics are presented in row 3 of each table. * (and, respectively, **, ***) indicates that the coefficient is significantly different from 0 at a 10% (and, respectively, 5%, 1%) level. Panel A: AR= a+ b*PFE+e by period Year for which forecast is made All observations All years 1 st fiscal year following IPO 38 2 nd fiscal year following IPO 3 rd fiscal year following IPO β 0.6805 -0.0057 0.3433 2.6614** # of observations 286 137 105 44 t-statistic 1.027 -0.009 0.412 2.050 R square 0.01 0.00 0.00 0.11 Panel B: AR= a+ b*AFE+e by period Year for which forecast is made All observations All years 1 st fiscal year following IPO 2 nd fiscal year following IPO 3 rd fiscal year following IPO β 1.8608*** 1.7552*** 1.4986*** 2.7877*** # of observations 2130 945 802 383 t-statistic 6.851 3.281 5.071 3.059 R square 0.07 0.04 0.06 0.13 By firm All years Year 1 Year 2 Year 3 β 1.6785*** 0.9577 1.1920** 3.348*** # of observations 432 185 156 91 t-statistic 3.873 0.981 2.424 4.046 R square 0.07 0.02 0.05 0.17 Panel C: AR= a+ b*AFE+e by analyst affiliation Type of analyst affiliation All years / All observations 1 2 3 4 β 2.2584** 1.6680*** 1.8176*** 2.8280** # of observations 54 387 1320 277 t-statistic 2.309 3.501 4.934 2.588 R square 0.10 0.06 0.07 0.04

0,3 0,2 0,1 0 -0,1 month1 -0,2 -0,3 -0,4 -0,5 -0,6 -0,7 Figure 1 Long-term performances of French IPOs The sample consists of 243 IPOs that occurred on the French “Second Marché” and “Nouveau Marché” between January 1991 and July 1998. In Panels A, B and C, we present average, weighted average and median long-term performances for those IPOs, between IPO date + 5 trading days and IPO date + 36 months. In panel B, performance is weighted by market capitalization as at IPO date. We use 2 methods of calculation: CAR (Cumulated Average Returns) and BHR (Buy-and-Hold Returns). We take 3 benchmarks: the MIDCAC index, industry indices and portfolios of companies with book-to-market ratio and size similar to the ones of each firm in the sample. The combination of the 2 methods and the 3 benchmarks gives us 6 different measures for each Panel: - CARMID: CAR method / MIDCAC index, - CARIND: CAR method / Industry indices, - CARPOR: CAR method / Matching portfolio, - BHRMID: BHR method / MIDCAC index, - BHRIND: BHR method / Industry indices, - BHRPOR: BHR method / Matching portfolio. Panel A: 36-month performance (average) month3 month5 month7 month9 month11 month13 month15 month17 month19 month21 month23 39 month25 month27 month29 month31 month33 month35 bhrind bhrmid bhrpor carind carmid carpor

Evidence regarding the stock market's overreaction to management ...
Initial Public Offerings: The mechanics and performance of IPOs (Harriman Finance Essentials)
Earnings Management and IPOS – Evidence from Finland - LTA
Does Meeting Earnings Expectations Matter? Evidence from Analyst ...
Some Evidence on the Relationship Between Performance Related ...
Earnings Management and the Long-Run Market Performance of ...
The Rewards to Meeting or Beating Earnings Expectations
IPO Underpricing, Firm Quality, and Analyst Forecasts
BENCHMARK-SENSITIVITY OF IPO LONG-RUN PERFORMANCE ...
Earnings Management in IPO - Marriott School
Intangible Assets and Valuation of IPOs - Intellectual Property ...
Detecting Information Pooling: Evidence from Earnings ... - FDIC
Earnings Quality: Evidence from the Field - Rotman School of ...
Earnings Surprises, Growth Expectations, and Stock Returns:
Who provides a certification effect? Evidence from IPOs on the ...
Understanding Analysts' Earnings Expectations - Rady School of ...
Information Content of Earnings Management: Evidence - Krannert ...
What Drives the Initial Market Performance of ... - IPO-Underpricing
Empirical Evidence on the Evolution of International Earnings
Do IPOs Underperform in the Long-Run? New Evidence ... - Cirano
What Comprises IPO Initial Returns: Evidence from the Chinese ...
The Post Offering Performance of IPOs in the Banking Industry
Family Control and Earnings Management: Malaysia Evidence - ipedr
The Acquisition of Prosody: Evidence from French - Haskins ...
Product Market Competition and Earnings Management: Some ...
Performance of Initial Public Offerings: The Evidence for Switzerland
Evidence of Performance - HUECK + RICHTER Aluminium GmbH
Earnings Conservatism: Panel Data Evidence from the EU and the US