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Analysis of IPO Dividend Forecasts for Australian LPTs

Author/s: William Dimovski

Date Published: 1/01/2008

Published in: Volume 14 - 2008 Issue 2 (pages 150 - 160)

Abstract

While dividend forecasts in the prospectuses of initial public offerings (IPOs) are common, Brown et al. (2000) have found them to be optimistically biased. This study investigates the dividend/distribution forecasts in the prospectuses of Australian LPT IPOs during the period 1994 to 2004 and finds on average that they are not optimistically biased. Because dividends have important cash flow implications for investors, this study also examines factors that might influence the magnitude of the errors between the forecast and the actual distributions. It finds that LPT IPOs that offer stapled securities have overestimated their distribution paying ability.

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Keywords

Dividend Forecasts - Dividends - Initial Public Offerings (Ipos) - Listed Property Trusts (Lpts)

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