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Is there useful information in the ‘use of proceeds’ disclosures in IPO prospectuses?
Author(s) -
Wyatt Anne
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12013
Subject(s) - prospectus , initial public offering , valuation (finance) , business , listing (finance) , accounting , relevance (law) , information asymmetry , actuarial science , finance , political science , law
This study contributes evidence on the valuation relevance of the ‘use of proceeds’ disclosure in the initial public offering ( IPO ) prospectus. This article develops a classification of ‘use of proceeds’ disclosures that aims to capture information embedded in the disclosures relating to the purpose (growth, production, financing) and amount committed to specific assets. These measures are then related to IPO underpricing, survival prediction and expected and realised prospects of the IPO s. The results suggest the ‘use of proceeds’ disclosure categories have incremental information over other sources of information for underpricing, for predicting firm survival and in the case of some disclosure categories, for investors’ evaluation of the firms’ prospects and risks in the early years after listing.