The Accuracy of Sales Forecasts Disclosed in the IPO Prospectuses: Evidence From Istanbul Stock Exchange

This paper examines the accuracy of sales forecasts disclosed in the prospectuses by the Turkish IPO (Initial Public Offering) companies at the Istanbul Stock Exchange during the period 2002-2007. Their accuracy is measured by forecast errors, absolute forecast errors, and squared forecast errors. A number of company specific characteristics such as company size, company age, auditing firm reputation, investment bank reputation, forecast horizon, financial leverage, retained ownership, and industry membership are tested to see whether these variables make any difference for the accuracy of sales forecasts among the IPO firms. The results of this study show that there are significant differences between the forecasting numbers and realized numbers of Turkish IPO firms. However, these differences are statistically significant only for industry membership.