The Disclosure of Risk Factors by Companies Listed in the NewConnect Market - An Empirical Investigation
DOI:
https://doi.org/10.15678/krem.800Keywords:
NewConnect, IPO, first offering risk, rate of return after the first day of trading, entrepreneurshipAbstract
The paper presents the results of research on the number of risk factors disclosed in official admissions documents prepared by companies entering the NewConnect market in the first half of 2010. It was assumed that the informational content of admissions documents is similar to offering documents presented to investors who buy stocks in a private offer prior to a listing. A positive relationship between the number of risk factors disclosed in the documents and the amount of mispricing at the end of the first day of trading was found. A similar relationship was documented for market risk measured by standard deviation of returns after listing. It was also shown that companies operating in innovative sectors disclose more risk factors, especially those related to the firm itself and its operations. This may be observed mainly for factors related to entrepreneurship, technology and strategy.
Downloads
References
Akerlof G.A. [1970], The Market for ‘Lemons': Quality Uncertainty and the Market Mechanism, „Quarterly Journal of Economics", vol. 84(3). DOI: https://doi.org/10.2307/1879431
Beattie V. [1999], Business Reporting: The Inevitable Change, Institute of Chartered Accountants of Scotland, Edinburg.
Beatty R.P., Ritter J.R. [1986], Investment Banking, Reputation and the Underpricing of Initial Public Offerings, „Journal of Financial Economics", vol. 15. DOI: https://doi.org/10.1016/0304-405X(86)90055-3
Beatty R.P., Welch I. [1996], Issuer Expenses and Legal Liability in Initial Public Offerings, „Journal of Law & Economics", vol. 39. DOI: https://doi.org/10.1086/467359
Beatty R.P., Zajac E.J. [1994], Managerial Incentives, Monitoring, and Risk Bearing: a Study of Executivecompensation, Ownership, and Board Structure in Initial Public Offerings, „Administrative Science Quarterly", vol. 39. DOI: https://doi.org/10.2307/2393238
Bukh P.N. i in. [2005], Disclosure of Information on Intellectual Capital in Danish IPO Prospectuses, „Accounting, Auditing & Accountability Journal", vol. 18, nr 6.
Certo S.T., Covin J.G., Daily C.M., Dalton D.R. [2001], Wealth and Effects of Founder Management among IPOstage New Ventures, „Strategic Management Journal", vol. 22. DOI: https://doi.org/10.1002/smj.182
Daily C.M., Certo T.S., Dalton D.R. [2005], Investment Bankers and IPO Pricing: Does Prospectus Information Matter? „Journal of Business Venturing", vol. 20 iss. 1. DOI: https://doi.org/10.1016/j.jbusvent.2003.10.003
Ibbotson R.J., Sindelar J., Ritter J. [1988], Initial Public Offerings, „Journal of Applied Corporate Finance", vol. 1. DOI: https://doi.org/10.1111/j.1745-6622.1988.tb00164.x
Jain B.A., Jayaraman N., Kini O. [2008], The Path-to-Profitability of Internet IPO Firms, „Journal of Business Venturing", vol. 23(2). DOI: https://doi.org/10.1016/j.jbusvent.2007.02.004
Khaled A., Dicle M.F. [2007], Do Risk Factors Matter in the IPO Valuation? „Journal of Financial Regulation and Compliance", vol. 15, nr 1.
Knight F. [1921], Risk, Uncertainty and Profit, Harper & Row, New York.
Leland H., Pyle D. [1977], Informational Asymmetries, Financial Structure, and Financial Intermediation, „Journal of Finance", vol. 32. DOI: https://doi.org/10.2307/2326770
Markowitz H. [1952], Portfolio Selection, „Journal of Finance", vol. 7, nr 1. DOI: https://doi.org/10.2307/2975974
Miller D. [1983], The Correlates of Entrepreneurship in Three Types of Firms, „Management Science", vol. 29(7). DOI: https://doi.org/10.1287/mnsc.29.7.770
Morawczyński R. [2011], Capital Market and Entrepreneurship - Few Observations from the Polish Alternative Platform NewConnect [w:] Knowledge - Economy - Society. Chalanges of the Contemporary World, red. R. Oczkowska, B. Mikuła, University of Economics, Cracow.
Murugesu J., Santhapparaj A.S. [2010], Impact of Risk Disclosure in the Prospectus on Valuation and Initial Retunrs of Initial Public Offerings in Malaysia, „The IUP Journal of Applied Finance", vol. 16, nr 6.
Rock K. [1986], Why New Issues Are Undepriced, „Journal of Financial Economics", vol. 15. DOI: https://doi.org/10.1016/0304-405X(86)90054-1
Sharpe W. [1964], Capital Asset Prices: a Theory of Market Equilibrium under Conditional Risk, „Journal of Finance", vol. 19. DOI: https://doi.org/10.2307/2977928
Siwek P. [2005], Praktyka pierwszych ofert publicznych w Polsce, CeDeWu, Warszawa.
Sukacz D. [2005], Pierwsze oferty publiczne na rynkach kapitałowych, CeDeWu, Warszawa.
Zarządzanie ryzykiem [2007], red. K. Jajuga, PWN, Warszawa.
