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Lockup and Voluntary Earnings Forecast Disclosure in IPOs

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  • Beng Soon Chong
  • Kim Wai Ho

Abstract

We examine the relation between lockup length and voluntary earnings forecast disclosures for IPOs in Singapore. Unlike firms in the United States, companies in Singapore are allowed to provide earnings forecasts in their IPO prospectuses. We find that forecasters are more likely to accept longer lockup periods, so that the lockup expires after the first post-IPO earnings announcement. Our study also shows that because the lockup agreement removes personal incentives to issue aggressive forecasts, IPO firms tend to issue conservative forecasts. Overall, our results suggest that the lockup mechanism adds credibility to the earnings forecast given in the IPO prospectus. Copyright (c) 2007 Financial Management Association International.

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Bibliographic Info

Article provided by Financial Management Association International in its journal Financial Management.

Volume (Year): 36 (2007)
Issue (Month): 3 (09)
Pages: 63-80

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Handle: RePEc:bla:finmgt:v:36:y:2007:i:3:p:63-80

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Cited by:
  1. Emmanuelle Negre & Isabelle Martinez, 2012. "Une Analyse Lexicale Des Communiques De Presse Volontaires Emis Lors Des Opa/Ope : Quels Profils De Diffusion ?," Post-Print hal-00936567, HAL.
  2. Hsuan-Chi Chen & Robert Fok & Chiuling Lu, 2011. "An Analysis of Lockups in REIT IPOs," The Journal of Real Estate Finance and Economics, Springer, vol. 43(3), pages 359-384, October.

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