Managing news coverage around initial public offerings

Ho, Chia-Cheng, Huang, Chi-Ling, Lin, Chien-Ting and Lin, George Y. C. 2010, Managing news coverage around initial public offerings, Financial management, vol. 39, no. 1, Spring, pp. 187-225, doi: 10.1111/j.1755-053X.2010.01070.x.

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Title Managing news coverage around initial public offerings
Author(s) Ho, Chia-Cheng
Huang, Chi-Ling
Lin, Chien-TingORCID iD for Lin, Chien-Ting
Lin, George Y. C.
Journal name Financial management
Volume number 39
Issue number 1
Season Spring
Start page 187
End page 225
Total pages 39
Publisher Wiley
Place of publication London, England
Publication date 2010
ISSN 0046-3892
Summary We examine opportunistic behavior of initial public offering (IPO) firms in Taiwan where they are required to disclose their own earnings forecasts and are unrestricted in releasing news around the offerings. We find that prior to the offerings, IPO firms tend to report higher earnings, disclose inflated earnings forecasts, and manage more good news. News management, however, emerges as the most predominant factor in aftermarket stock prices. In particular, IPO firms have a strong preference for releasing good news related to strategy/policy that may simply provide a vision of a firm's future. Furthermore, the news releases are often forward-looking when they are positive about the firms but tend to be realized when they are negative. IPO firms also tend to engage in more window dressing activities before a larger sale of IPO shares from existing shareholders or a larger decline in insiders' holdings. Our analysis shows that managerial optimism cannot fully account for their behavior.
Language eng
DOI 10.1111/j.1755-053X.2010.01070.x
Field of Research 159999 Commerce, Management, Tourism and Services not elsewhere classified
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
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Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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