Summary

• In this short paper, the general characteristics surrounding the voluntary release of prospectus earnings forecasts are examined for a sample of recently organised initial public offerings in Hong Kong. In terms of forecast accuracy, results, relative to earlier Hong Kong-based studies [Chan et al. (1996), Jaggi (1997), Cheng and Firth (2000) and Chen, Firth and Krishnan (2001)], point to an even tighter distribution of forecast errors than was the case for IPOs in the early to mid 1990s. A more sophisticated primary market- in which dual-tranche offerings, many with variable offer prices and over-allotment options, dominate- allied to improved corporate governance practice is the likely reason for this outcome. • Post-listing deviations from prospectus forecasts are also noted to be positively related to the percentage of equity retained in the newly listed firms by pre-listing stakeholders as well as to the utilisation of over-allotment options by issue underwriters. Finally, the importance of underpricing to the disclosure of IPO earnings forecasts- as signalled in the work of Jog and McConomy (2003) for Canadian IPOs- is partially reflected through the over-allotment option exercise decision variable. The latter is strongly and positively related to both the incidence of a prospectus earnings forecast and the magnitude of IPO underpricing. 1 This paper is for pure fact-finding and research purposes, and is not an attempt to comment on the developments of any markets/ companies or interpret the policies concerned. The views expressed in this paper do not represent those of the SFC. The author would like to thank Kevin Keasey, Michael Ferguson and an anonymous reviewer for their comments on an earlier draft of thi