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The purpose of this study is to assess how the information disclosed in prospectuses impacted the initial public offering (IPO) underpricing at a time of high government interference amid the ongoing pandemic.

The design of this study has several tracks, namely, a macro-level track, which is represented by the government measures to halt the pandemic; a micro-level track, which is followed by textual analysis of IPO prospectuses; and, finally, a machine learning track, in which the authors use state-of-the-art tools to improve their linear regression model.

The authors found that strict government anti-COVID-19 measures indeed contribute to the reduction of the IPO underpricing. Interestingly, the mere fact of such measures taking place is enough to take effect on financial markets, regardless of the resulting efficiency of such measures. At the micro-level, the authors show that prospectus sentiments and their significance differ across prospectus sections. Using linear regression and machine learning models, the authors find robust evidence that such sections as “Risk factors”, “Prospectus summary”, “Financial Information” and “Business” play a crucial role in explaining the underpricing. Their effect is different, namely, it turns out that the more negative “Risk factors” and “Financial Information” sentiment, the higher the resulting underpricing. Conversely, the more positive “Prospectus summary” and “Business” sentiments appear, the lower the resulting underpricing is. In addition, we used machine learning methods. Consisting of more than 580 IPO prospectuses, the study sample required modern and powerful machine learning tools like Isolation Forest for pre-processing or Random Forest Regressor and Light Gradient Boosting Model for modelling purposes, which enabled the authors to gain better results compared to the classic linear regression model.

At the micro level, this study is not confined to 2020, but also embraces 2021, the year of the record number of IPOs held. Moreover, in this paper, these were prospectuses that served as a source of management sentiment. In addition, the authors used a tailor-made government stringency index. At the micro level, basing the study on behavioural finance hypotheses, the authors conducted both separate and holistic analysis of prospectuses to assess investors’ reaction to different aspects of IPO companies as well as to the characteristics of the IPOs themselves. Lastly, the authors introduced a few innovations to the research methodology. Textual analysis was conducted on a corpus of prospectuses included in a study sample. However, the authors did not use pre-trained dictionaries, but instead opted for FLAIR, a modern open-source framework for natural language processing.

The purpose of this paper is to examine whether information on intellectual capital (non‐financial information on knowledge based resources) is disclosed in Danish IPO prospectuses. Further, to analyse whether this voluntary disclosure has changed in the period from 1999 to 2001 and to analyse what factors can explain the amount of disclosure in the prospectuses.

The paper uses content analysis to compile a measure of disclosure on each prospectus and statistical analysis to test whether there is an association between disclosure and company type, the existence of managerial ownership before the IPO, the size of the company or the age of the firm.

Based on statistical analysis, it is concluded that the extent of managerial ownership prior to the IPO and industry type affects the amount of voluntary intellectual capital disclosure, while company size and age do not affect disclosure. The results are interpreted in the light of the increasing importance of disclosing information on value drivers, strategy and intellectual capital to the capital market and constitute a contribution to the ongoing debate on corporate reporting practices.

Since information on intellectual capital is already disclosed in IPO prospectuses this reporting form can be used as inspiration when an intellectual capital report is developed. The results also indicate that companies and their advisers believe that this type of information is important in the capital market's assessment of the company's value. Further, it is suggested that intellectual capital reports should be read in the context of the firm's strategy in the same manner as an prospectus is read.

Very few papers have analysed disclosure in prospectuses and it has been from a different perspective from this paper. Further, this paper analyses a time series of data and demonstrates how the amount of disclosure has developed over the years. Finally, the paper contributes to the body of literature on what factors explain disclosure in general.

The study intends to shed lights on whether the risk factors disclosed in the initial public offering (IPO) prospectus in Malaysia are able to reflect the actual risks of stocks once they are traded on the exchange. In other words, the purpose of this paper is to explore whether prospective investors will be able to benefit, in terms of the more accurate risk information, from the risk disclosures in the IPO-prospectus.

Using data obtained from 118 IPO prospectuses of Malaysian companies that issued shares on Bursa Malaysia in the period from 2009 to 2016, the authors investigated whether the “risk factor” section in the IPO prospectuses provides sufficient risk-relevant information to investors. To determine whether companies disclose risk-relevant information, a detailed content analysis of the risk sections was carried out to obtain an aggregate measure of risk disclosure.

The findings revealed that the aggregate measures of risk extracted from these texts did not successfully predict the following outcomes: the volatility of companies’ future stock prices, the sensitivity of future stock prices to market-wide fluctuations and the severe declines in future stock prices.

As indicated by the findings, the authors, therefore, deduce that the IPO prospectuses of Malaysian companies do not provide sufficient risk-relevant information in the risk factor section. The findings imply that overall the management of Malaysian companies would neither be able nor willing to disclose the right and relevant information to the public via IPO prospectus.

Many corporate risk disclosure studies focus primarily on the disclosures of annual reports of companies. The study intends to fill the gap by focusing on the risk disclosure in the IPO-prospectus. Risk disclosures in IPO-prospectus are farmore extensive than annual reports and, therefore, provide a richness of information that will not be available in the annual reports.

Understanding the determinants of a corporate initial public offering (IPO) success is essential for reducing investors' valuation uncertainty when participating in share offerings. In this sense, this study contributes to the existing debate by examining IPO prospectus readability. The authors specifically investigate how clear and more informative insights into pure corporate key financial numbers can lead to a higher valuation for the company after the listing process.

Through a sample of European IPOs, the authors employ a cross-sectional regression to test the relationship between prospectus readability through the Flesch reading ease (FRE) score and companies' market-to-book ratio at the period end date after the listing process.

The study findings show a positive impact of higher readability on the post-IPO market-to-book ratio. Thus, clear and more informative communication results in stocks being traded at a premium to their book value. This study presents a concrete call for firms to increase corporate documents’ readability to mitigate the risk of withdrawing or spoiling corporate market access. Specifically, enhanced clarity and transparency increase investors' confidence, facilitating a better understanding of companies' intrinsic value and the overall IPO process. The authors conducted several tests to validate the results.

To the best of the authors’ knowledge, this is among the first works to explore the relationship between the readability of corporate prospectus and the sustained IPO success in the European context.

This study examines the accuracy and bias of profit forecasts disclosed in prospectuses by New Zealand companies for initial public offerings during the period 1987 to 1994. The results show that profit forecasts in this period are, on average, more accurate titan those disclosed prior to 1987, which were examined in prior studies. However, the results reject the null hypothesis that profit forecasts are accurate. In examining forecast bias, the evidence shows that the forecasts are, on average, somewhat pessimistic, but not sufficiently to reject the hypothesis that profit forecasts are unbiased. Tests of the determinants of error show that larger companies make more accurate forecasts, and forecasts made in the year 1987 are less accurate than in other years. Tests of the determinants of bias show that forecasts made in 1987 are also more optimistic, and that companies with longer trading histories and pessimistic forecasts make less biased forecasts. Forecast period and industry type are not significantly related to error or bias.

The purpose of the paper is to investigate intangibles disclosure in Italian initial public offerings (IPO) prospectuses. It seeks to examine whether intangibles disclosure in IPO prospectuses is correlated to some firm‐specific variables, which influence the information selected by a company for its admission on the stock exchange.

The paper is an empirical analysis of intangibles disclosure in Italian IPO prospectuses, and in particular an analysis of its association with some firm‐specific variables through a regression model.

The paper finds that intangibles information is increasing in Italian IPOs. Firm size and pre‐IPO managerial ownership are associated with intangibles disclosure, while firm age and level of technology are not related.

The paper shows that the IPO disclosure could not be exhaustive of the intangibles disclosure provided by Italian companies, because it is produced on a voluntary basis. Originality/value – The empirical results indicate that intangibles disclosure is important in the capital markets assessment of firm value.

The main purpose of the present study is to stretch the theoretical framework of existing stock of literature with reference to Risk Disclosures in IPO Prospectus and IPO performance. The systematic literature review study endows easy and quick access to researchers as well as categorization of the available literature.

Fifty research papers, which has been published or presented from 2000 to 2019 and are related to IPO risk disclosures and IPO performance, have been finalized. Further, these research papers were categorized based upon the five different variables to identify the probable research gap in the selected topic.

This review provides a coherent summary of past studies related to topic and develop a comprehensive evidence on relationship between disclosure of risk factors and IPO underpricing in short run. It shows the existing research gap that needs to be fulfilled to expand the research horizon of future research studies.

The sole limitation of the study is that being a systematic literature review study, it does not carry any empirical results.

The investors will be able to identify the key risk factors, disclosed in IPO prospectus, that may have probable dent on the short-term return from IPO. The findings will further help the investors and financial analyst to identify the degree of impact of risk disclosures that are listed in IPO prospectus.

The paper is a first of its kind to stretch the existing literature and develop theoretical framework in the context of risk factor discloses in IPO prospectus and IPO performance with reference to India. The present study is an attempt to integrate the existing gap between empirical research and existing literature and suggest the techniques to the future practitioners to widen the horizon of their research.

Excessive initial trading day returns (termed underpricing (UP)) and poor long‐run performance (LRP) are two well‐documented anomalies associated with initial public offerings (IPOs).The primary objective of this study is to empirically test the association between the extent of intellectual capital (IC) disclosure in the prospectus of an unseasoned IPO and: UP and LRP.

Ex ante uncertainty surrounding IC – recognized as the pivotal resource underlying a firm's future value creation and sustainable competitive advantage in the “new economic” era – is likely to be high. Unseasoned IPOs world‐wide are increasing with many IPOs heavily IC‐reliant. Given ex ante uncertainty surrounding IC, there is an escalating need to understand how disclosure of information related to IC can reduce an IPO's cost of capital (i.e. UP) and provide an indication of LRP. The analysis is based on a sample of 228 Singapore IPOs listing during the period 1997‐2003. IC disclosure (ICDisc) in IPO prospectuses is measured using an 81‐item researcher constructed disclosure index.

Empirical findings indicate, contrary to expectations, a positive (negative) ICDisc‐UP (ICDisc‐LRP) association.

It is the opinion that regulators, scholars and practitioners alike need to pay attention to developing a responsible model for reporting IC information so as to prevent a potentially unhealthy speculative environment driven by over‐optimism.

The study is the first to simultaneously investigate the linkage between ICDisc and UP and: LRP.

When a firm goes public for the first time, its prospectus serves as an important reference for investors. It is required by regulation that the risk factors which have significant influence on the business be disclosed in the prospectus. The purpose of this study is to analyze how disclosure of these risk factors influences the initial returns of initial public offerings (IPOs).

To do this, a sample of 96 Malaysian new equity offerings (IPOs) from year 2009 to year 2013 is used. Ordinary least squares regression technique is used to regress initial returns against risk disclosures. Aside from overall risk disclosure, individual dimensions of risk (internal risk, external risk and investment risk) are also considered.

Results of the regression analyses reveal a direct relationship between the IPO initial returns and the disclosure of risk. Overall risk disclosure is found to be highly significant in influencing initial returns. However, further investigation into the individual group of risks shows that only investment risk is highly significant in influencing IPO initial returns.

The results found in this study are interesting as, unlike prior studies, it is shown that disclosures of internal and external risks are not significant in influencing investors’ actions possibly because of their generalizability, whereas disclosures related to investment risks are significant. Equity of firms which disclose more of its risk factors can be expected to generate higher initial returns.

This paper aims to focus on how forecasts information is disclosed in IPO prospectuses. In France, managers report either detailed forecasts or only a brief summary.

The authors investigate the determinants and consequences of the varying levels of details provided in these forecasts. The research is based on a sample of 82 IPOs on the Euronext Paris market (2000‐2002).

The paper shows that only two variables are associated with highly detailed forecast disclosures: forecast horizon and firm age. It is also found that the forecast error decreases as the level of detail in the forecast disclosures increases. This finding is robust to a reverse causality test (Heckman two‐stage self‐selection procedure) and suggests that the level of detail in forecast disclosures enhances the reliability of earnings forecasts.

The paper suffers from at least two potential flaws. First, omitted variables, such as the possession of good news or proprietary costs. can influence both forecast errors and the level of detail of forecasts. Second, the negative association between the level of detail in forecast information and forecast errors may either show that detailed information leads to less forecast error or reflect a self‐selection bias.

This research could have implications for stock market regulators as it suggests that mandatory disclosure of highly detailed forecasts would improve the effeciency of the markets by reducing forecast error.

This paper contributes to be literature by presenting evidence tha the way forecast information is disclosed in IPO prospectuses is of importance and by documenting a negative association between forecast error and the level of detail in forecast disclosures.