Levels of voluntary disclosure in IPO prospectuses: An empirical analysis

A. Cazavan-Jeny, T. JEANJEAN

Review of Accounting & Finance

2007, vol. 6, n°2, pp.131-149

Départements : Comptabilité et Contrôle de Gestion

This paper focuses on how forecasts information is disclosed in IPO prospectuses. ln France, managers report either detailed forecasts or only a brief summary. We investigate the determinants and consequences of the varying levels of detail provided in these forecasts. Based on a sample of 82 IPOs on the Euronext Paris market (2000-2002), we show that only two variables are associated with highly detailed forecast disclosures: forecast horizon and firm age. We also find that the forecast error decreases as the level of detail in the forecast disclosures increases. This finding is robust to our reverse causality test (Heckman two-stage self-selection procedure) and suggests that the level of detail in forecast disclosures enhances the reliability of earnings forecastsDisclosure, Reports, France, Financial reporting