Outperforming markets: IC and the long-term performance of Japanese IPOs

Christian Nielsen, Gunnar Rimmel, Tadanori Yosano

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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Resumé

Purpose – This article studies the effects of disclosure practices of Japanese IPO prospectuses on long-term stock performance and bid-ask spread, as a proxy for cost of capital, after a company is admitted to the stock exchange.
Design/methodology/approach – A disclosure index methodology is applied on 120 IPO prospectuses from 2003 to define the nature and extent of the disclosures concerning intellectual capital in order to study the effects of information asymmetries on stock price valuation.
Findings – Intellectual capital information leads to significantly better long-term performance against a reference portfolio, and is thus important to the capital market. Further, superior disclosure of IC reduces bid-ask spread in the long-term, indicating that such disclosures are important in an IPO setting
Research limitations/implications – There are some limitations to the findings. The data presented here reflects only one year of IPO’s on the Tokyo Stock Exchange. Therefore, the results must be read with some caution, as the stock market environment in the particular year, 2003, may not reflect that of a normal “over the cycle” year.
Practical implications – Analysts and investors can attain higher long-term returns by understanding IC. Therefore, it seems to be contradictory that their interest in IC disclosure is so low.
Originality/value – This article is the first one to discuss interrelations between voluntary disclosure practices and the long-term effects of information asymmetry in the Japanese context.

Keywords: Voluntary disclosures, intellectual capital, IPO prospectuses, long-term performance, bid-ask spread, cost of capital, Japan
Paper type: Research paper
OriginalsprogEngelsk
TidsskriftAccounting Forum
Vol/bind39
Udgave nummer2
Sider (fra-til)83–96
ISSN0155-9982
DOI
StatusUdgivet - 1 maj 2015

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Long-term performance
Disclosure
Bid/ask spread
Capital markets
Investors
Disclosure index
Stock performance
Methodology
Cost of capital
Stock exchange
Analysts
Long-term returns
Intellectual capital

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    Nielsen, Christian ; Rimmel, Gunnar ; Yosano, Tadanori. / Outperforming markets : IC and the long-term performance of Japanese IPOs. I: Accounting Forum. 2015 ; Bind 39, Nr. 2. s. 83–96.
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    Outperforming markets : IC and the long-term performance of Japanese IPOs. / Nielsen, Christian; Rimmel, Gunnar; Yosano, Tadanori.

    I: Accounting Forum, Bind 39, Nr. 2, 01.05.2015, s. 83–96.

    Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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