Fundamental analysis and the valuation of IPOs in the construction industry

Dimitrios C. Ghicas; Nikolaos Iriotis; Aphroditi Papadaki; Martin Walker

doi:10.1016/S0020-7063(00)00047-9

Fundamental analysis and the valuation of IPOs in the construction industry

Dimitrios C. Ghicas, Nikolaos Iriotis, Aphroditi Papadaki, Martin Walker

A&F Accounting & Finance

Research output: Contribution to journal › Article › peer-review

Abstract

This study shows that: (1) In addition to past earnings, incomplete contracts disclosed in the prospectuses of construction firms' IPOs is an important explanatory variable of earnings forecasts made by investment bankers. (2) Earnings forecasts can explain the offer prices set by investment bankers in the IPOs of construction firms. (3) Stock returns subsequent to the initial public offering are predictable on the basis of incomplete contract information available in the prospectuses. This last finding is robust to the inclusion of control variables for ex ante uncertainty, size, book-to-market, leverage, and earnings-to-price effects. The association between stock returns subsequent to the equity offering and incomplete contracts is consistent with both market inefficiency and the presence of risk factors for which investors expect greater underpricing of the IPO. Copyright © 2000 University of Illinois.

Original language	English
Pages (from-to)	227-241
Number of pages	14
Journal	International Journal of Accounting
Volume	35
Issue number	2
DOIs	https://doi.org/10.1016/S0020-7063(00)00047-9
Publication status	Published - 2000

Keywords

Construction industry
Fundamental analysis
IPOs
Valuation

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10.1016/S0020-7063(00)00047-9

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title = "Fundamental analysis and the valuation of IPOs in the construction industry",

abstract = "This study shows that: (1) In addition to past earnings, incomplete contracts disclosed in the prospectuses of construction firms' IPOs is an important explanatory variable of earnings forecasts made by investment bankers. (2) Earnings forecasts can explain the offer prices set by investment bankers in the IPOs of construction firms. (3) Stock returns subsequent to the initial public offering are predictable on the basis of incomplete contract information available in the prospectuses. This last finding is robust to the inclusion of control variables for ex ante uncertainty, size, book-to-market, leverage, and earnings-to-price effects. The association between stock returns subsequent to the equity offering and incomplete contracts is consistent with both market inefficiency and the presence of risk factors for which investors expect greater underpricing of the IPO. Copyright {\textcopyright} 2000 University of Illinois.",

keywords = "Construction industry, Fundamental analysis, IPOs, Valuation",

author = "Ghicas, {Dimitrios C.} and Nikolaos Iriotis and Aphroditi Papadaki and Martin Walker",

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TY - JOUR

T1 - Fundamental analysis and the valuation of IPOs in the construction industry

AU - Ghicas, Dimitrios C.

AU - Iriotis, Nikolaos

AU - Papadaki, Aphroditi

AU - Walker, Martin

PY - 2000

Y1 - 2000

N2 - This study shows that: (1) In addition to past earnings, incomplete contracts disclosed in the prospectuses of construction firms' IPOs is an important explanatory variable of earnings forecasts made by investment bankers. (2) Earnings forecasts can explain the offer prices set by investment bankers in the IPOs of construction firms. (3) Stock returns subsequent to the initial public offering are predictable on the basis of incomplete contract information available in the prospectuses. This last finding is robust to the inclusion of control variables for ex ante uncertainty, size, book-to-market, leverage, and earnings-to-price effects. The association between stock returns subsequent to the equity offering and incomplete contracts is consistent with both market inefficiency and the presence of risk factors for which investors expect greater underpricing of the IPO. Copyright © 2000 University of Illinois.

AB - This study shows that: (1) In addition to past earnings, incomplete contracts disclosed in the prospectuses of construction firms' IPOs is an important explanatory variable of earnings forecasts made by investment bankers. (2) Earnings forecasts can explain the offer prices set by investment bankers in the IPOs of construction firms. (3) Stock returns subsequent to the initial public offering are predictable on the basis of incomplete contract information available in the prospectuses. This last finding is robust to the inclusion of control variables for ex ante uncertainty, size, book-to-market, leverage, and earnings-to-price effects. The association between stock returns subsequent to the equity offering and incomplete contracts is consistent with both market inefficiency and the presence of risk factors for which investors expect greater underpricing of the IPO. Copyright © 2000 University of Illinois.

KW - Construction industry

KW - Fundamental analysis

KW - IPOs

KW - Valuation

U2 - 10.1016/S0020-7063(00)00047-9

DO - 10.1016/S0020-7063(00)00047-9

M3 - Article

SN - 0020-7063

VL - 35

SP - 227

EP - 241

JO - International Journal of Accounting

JF - International Journal of Accounting

IS - 2

ER -

Fundamental analysis and the valuation of IPOs in the construction industry

Abstract

Keywords

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