Voluntary disclosure and quality of new stock companies’ earnings forecast in EU-regulated markets
Voluntary disclosure and quality of new stock companies’ earnings forecast in EU-regulated markets

Summary/Abstract: Companies conducting IPO in European countries make a voluntary decision regarding the disclosure of earnings forecast in prospectus. Using a sample of 651 companies that conducted IPO on EU-regulated markets between 2010 and 2016,we investigate the popularity of decisions on revealing financial forecasts in prospectus and address the questions regarding the type and accuracy of such forecasts. We find that only 12.58% of companies voluntarily included their financial forecasts in the IPO prospectus, and the scope of the disclosed information is diversified. Most commonly prospectuses include projections of sales revenues, net profits, and EBITDA. Our results give evidence that financial projections are over-optimistic and not accurate.

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