The underwriter's conflict of interest and earnings forecast bias in prospectus: Evidence from Hong Kong

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2024-08-12 DOI:10.1016/j.pacfin.2024.102481

Peter F. Chen , Qingchuan Hou , Yihong Wang , Lifang Xu

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Abstract

About 40% of the firms that go public on the Hong Kong Stock Exchange voluntarily include earnings forecasts in their prospectuses. These forecasts are on average biased downwards by 8% compared to the realized earnings. We hypothesize that the underwriter, in order to increase IPO underpricing and obtain private benefits, pressure managers to low-ball earnings forecasts in the prospectuses. We examine the effect of underwriting commission rate, reputation, and IPO trading commissions on the earnings forecast bias in the prospectuses. We find that underwriting commission rate is negatively associated with the forecast bias. Using the 90-day post-IPO trading volume as a proxy for future trading commissions and profits generated from institutional investors and aftermarket trading activities in general, we document that trading commissions are positively associated with the forecast bias. Further analysis shows that underpricing is positively associated with the forecast bias, but the effect of the forecast bias on underpricing disappears after controlling for the underwriter's trading commission. Overall, these results are consistent with predictions based on the agency theories of underwriter by Baron (1982) and Loughran and Ritter (2002).

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承销商的利益冲突与招股说明书中的盈利预测偏差：来自香港的证据

在香港证券交易所上市的公司中，约有 40% 自愿在招股说明书中加入盈利预测。与实际盈利相比，这些预测平均偏低 8%。我们假设，承销商为了提高首次公开募股的定价偏低程度并获取私人利益，会向公司经理施压，要求他们在招股说明书中作出偏低的盈利预测。我们研究了承销佣金率、声誉和 IPO 交易佣金对招股说明书中盈利预测偏差的影响。我们发现，承销佣金率与预测偏差呈负相关。使用首次公开募股后 90 天的交易量作为未来交易佣金以及机构投资者和一般售后市场交易活动产生的利润的替代指标，我们发现交易佣金与预测偏差呈正相关。进一步的分析表明，定价偏低与预测偏差正相关，但在控制了承销商的交易佣金后，预测偏差对定价偏低的影响消失了。总体而言，这些结果与 Baron（1982 年）以及 Loughran 和 Ritter（2002 年）基于承销商代理理论的预测一致。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.