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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.

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.

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.

The purpose of this study is to examine investors’ intention and behavior concerning ex ante information acquirement and ex post claims from the micro-level perspective with the deepening of the initial public offering (IPO) reform of China.

The authors made surveys and collected 932 valid questionnaires from investors in China. The authors also conducted interviews with sophisticated investors, investment bankers and government regulators to obtain first-hand information. Based on the survey results, the authors make the empirical analysis.

Investors’ attention to the first-hand information of the IPO prospectuses is inadequate. Individuals rely more on second-hand information, while institutions conduct more surveys. The higher the institutional practitioners’ degree of education, the more surveys they make. Only 1/3 investors intend to seek judicial remedy when getting fraud information due to high litigation costs and proof collecting difficulties. The investors who read more about prospectuses in advance are more likely to seek judicial protection afterwards. Compared with investors who know less about government administrative protection measures, those who know more have a low probability to choose “not to seek judicial protection.”

The authors enrich the research studies of IPO information acquisition and investor protection by conducting surveys to get first-hand data. Previous literature mostly makes empirical tests by using proxy variables.

The purpose of this paper is to examine the relevance of information, transparency and information efficiency in short-run performance of new issues. The current research evaluates the short-run performance of IPOs during 2005-2012, which even includes the recessionary period. The present study evaluates the impact of informational variables on first-day returns.

The short-run performance of the IPOs is measured through market adjusted excess return. A structural equation model (SEM) has been designed to identify how information influences the short-run performance of IPOs.

The results of structural model reveal that the sale of promoters’ stake and underwriters’ reputation are the major contributors towards information and are found to be highly significant statistically. The model also shows that the issue size (a component of information) is statistically insignificant at 5 per cent. The model suggests that the availability of information has negative impact on the first day returns indicating that the issuer which disclose maximum information to the public get lower returns on the listing day and hence, their issues are less underpriced.

The present study has a contribution in investment decisions for global investors, as the participation of international investors is common in IPOs of emerging markets. The findings of the study are expected to be useful to the practitioners in predicting the pricing of IPOs based on the informational variables influencing their performance.

This is a literature survey paper. The purpose of this paper is to focus on the latest developments in textual analysis on China’s financial markets, highlighting its differences from existing works in the US markets.

The authors review the literature and carry out an experiment of sentiment analysis based on a small sample of Chinese news articles.

Based on the experiment of sentiment analysis, there is limited evidence on the association between sentiment and other contemporaneous or future returns.

The supply of financial textual information has grown exponentially in the past decades. Technological advancements in recent years make the programming-based analysis an effective tool to digest such information. The authors highlight the use of credible textual information and discuss directions of research in this important field.

This study aims to measure the extent of voluntary risk disclosure and examine the relationship between corporate governance firm level quality in the form of board characteristics and ownership concentration’s impact on risk disclosure in the annual reports of Indian listed companies.

The method adopted in this study is automated content analysis, which is applied to a sample of 100 listed Indian non-financial companies to find out the extent of risk disclosure. Further, multiple linear regressions have been applied to find out the relationship between corporate governance firm level quality in the form of board characteristics, ownership concentration and risk disclosure.

The findings reveal that the total number of positive risk keywords surpasses negative risk keywords disclosure. The corporate governance mainsprings, namely, board size and gender diversity have a positively significant effect on risk disclosure, whereas ownership concentration in the hands of the largest shareholder insignificantly affects risk disclosure, but identity of the largest shareholder having ownership concentration negatively affects disclosure of risk information in the case of Indian promoter body corporate, foreign promoter body corporate and non-institutions in comparison to family ownership.

This study relied on a set of 39 risk keywords for measuring the extent of risk disclosure. Further, it uses a sample of 100 companies to examine the effect of corporate governance on risk disclosure at one point of time. However, a longitudinal study can help in understanding risk disclosure adopted by Indian listed companies in a better manner.

The findings have implications for regulatory bodies such as the Securities and Exchange Board of India, which needs to strengthen corporate governance norms with respect to board characteristics and keep a check on ownership concentration for improving risk disclosure by companies.

To best of the authors’ knowledge, this study is a preliminary attempt linking two research lines in India, that is, corporate risk disclosure and corporate governance quality in the form of board characteristics and ownership concentration. The study identifies corporate governance firm level qualities which lead to divulgation of risk information by the companies pointing towards strengthening of regulatory regime in the country for improved corporate governance regulations adopted by listed companies.

This paper aims to provide a chronological review of changes in the institutional setting regulating Australian initial public offering (IPO) firms’ earnings forecasts over the period from 1994 to 2012. The changing forecasting environment covers both IPO firms’ prospectus earnings forecasts and post-listing updates to those forecasts.

This historical analysis reviews the changes in corporate regulation and enforcement, Australian Securities Exchange listing requirements and the outcomes of securities class actions (SCA) that affect IPO firms’ earnings forecasts.

A review of the institutional setting regulating Australian IPO firms’ earnings forecasts reveals two inter-temporal shifts in (increasing) litigation risk over 1994-2012 period which have arisen from more onerous regulations, stronger regulatory enforcement and a more active SCA market. The authors document the corporate responses to those shifts.

This is the first study to comprehensively document research of an inter-temporal litigation risk shift on IPO firms’ earnings forecasting behaviour. It therefore provides a formative base and a useful resource for researchers, practitioners and investigators (regulators, forensic accountants, etc.) when examining the impact of the changes on IPO firms’ forecasting behaviour following regulatory change and enforcement.

The purpose of this paper is to examine the direct and indirect impact of firm-specific characteristics on the level of underpricing among Malaysian initial public offerings (IPOs).

Content analysis of IPO prospectuses was used for 331 firms underwent listing between 2002 and 2008. The extent of disclosure was computed by applying the disclosure index of Bukh et al. (2005).

Of the five firm characteristics examined, there is a direct relationship between the firm’s financial performance and the level of foreign activity, and the level of underpricing, instead of being mediated through disclosure. However, some firm characteristics have direct influence on the extent of disclosure but do not have any influence on underpricing.

This empirical study concentrates on the Malaysian IPOs on a single disclosure mechanism. Other disclosure items can be examined together with the intellectual capital disclosure items.

As the findings reveal that the extent of disclosure is relatively low in influencing the level of underpricing. Had the disclosure been higher, it may have some influence on underpricing. The accounting governance board need to regulate the disclosures of the intangible resources so that the level of underpricing can be minimized.

This study provides new insight for the examination of direct and indirect (through disclosure) association between firm-specific characteristics and underpricing. The findings shed some lights to the IPO issuers to enhance disclosure so that the cost of capital can be reduced.