Determinants of Management Earnings Forecasts : The Case of Global Shipping IPOs

Companies that go public on global stock markets are not obliged to disclose earnings forecasts in their prospectuses. We use this fact to examine the shipping sector, where most firms issue earnings forecasts during the IPO process, and provide unique, international-level evidence. We find overall pessimistic forecasts of ship owners, primarily because of the maritime sector's uncertain and volatile environment. High ship owner participation after going public is associated with less accurate earnings forecasts. The evidence further indicates that financial leverage, a listing in an emerging stock market, and global market conditions are the main factors responsible for inaccurate earnings forecasts