Peer Accounting Information and the Use of Peer-based Multiples for IPO Valuation

Persistent Link:
http://hdl.handle.net/10150/556239
Title:
Peer Accounting Information and the Use of Peer-based Multiples for IPO Valuation
Author:
Brushwood, James Darrach
Issue Date:
2015
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
Initial public offerings (IPOs) are primarily valued using the comparable firms approach, whereby underwriters rely heavily on multiples based on the accounting information of peer firms. Effective use of the comparable firms approach depends significantly on the underwriter's ability to estimate the expected future growth and profitability of the IPO firm and its peers and make appropriate adjustments to the multiples to arrive at a final offer price for the IPO shares. I find evidence that, in general, IPO valuations are decreasing relative to peers in the similarity of the peer group to the IPO firm, but this effect is moderated by the peer group's accruals quality. These findings suggest that when peers are similar to the IPO firm, underwriters make less adjustments to the final offer price, however, higher peer accruals quality may ease the assessment of differences in growth and profitability, facilitating further adjustments.
Type:
text; Electronic Dissertation
Keywords:
Earnings; Initial Public Offering; Peer Accounting; Accounting
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Graduate College; Accounting
Degree Grantor:
University of Arizona
Advisor:
Dhaliwal, Dan S.
Committee Chair:
Dhaliwal, Dan S.

Full metadata record

DC FieldValue Language
dc.language.isoen_USen
dc.titlePeer Accounting Information and the Use of Peer-based Multiples for IPO Valuationen_US
dc.creatorBrushwood, James Darrachen
dc.contributor.authorBrushwood, James Darrachen
dc.date.issued2015en
dc.publisherThe University of Arizona.en
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en
dc.description.abstractInitial public offerings (IPOs) are primarily valued using the comparable firms approach, whereby underwriters rely heavily on multiples based on the accounting information of peer firms. Effective use of the comparable firms approach depends significantly on the underwriter's ability to estimate the expected future growth and profitability of the IPO firm and its peers and make appropriate adjustments to the multiples to arrive at a final offer price for the IPO shares. I find evidence that, in general, IPO valuations are decreasing relative to peers in the similarity of the peer group to the IPO firm, but this effect is moderated by the peer group's accruals quality. These findings suggest that when peers are similar to the IPO firm, underwriters make less adjustments to the final offer price, however, higher peer accruals quality may ease the assessment of differences in growth and profitability, facilitating further adjustments.en
dc.typetexten
dc.typeElectronic Dissertationen
dc.subjectEarningsen
dc.subjectInitial Public Offeringen
dc.subjectPeer Accountingen
dc.subjectAccountingen
thesis.degree.namePh.D.en
thesis.degree.leveldoctoralen
thesis.degree.disciplineGraduate Collegeen
thesis.degree.disciplineAccountingen
thesis.degree.grantorUniversity of Arizonaen
dc.contributor.advisorDhaliwal, Dan S.en
dc.contributor.chairDhaliwal, Dan S.en
dc.contributor.committeememberDhaliwal, Dan S.en
dc.contributor.committeememberNeamtiu, Monicaen
dc.contributor.committeememberSunder, Jayanthien
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