Abstract
In this paper, we analyzed 217 Japanese startups that have gone public since 2016 and find that companies that failed to meet their revenue forecasts presented to investors at IPO(initial public offering), or are considered “optimistic management forecasts,” have significantly worse stock price performance 500 days after the IPO. This suggests that investors do not consider the accuracy of their earnings forecasts. Post-IPO corporate growth requires raising the stock price and raising money through the stock market, so the quality of forecasts presented before the IPO is important. The purpose of this paper is to contribute to the discussion of IPO market development by presenting evidence that the quality of forecasts of domestic startups affects their stock prices after IPO.
