Budgettering & guidance: Et fokus på nye børsnoterede virksomheders rapportering

Abstract

When investing in a publicly traded entity, one might analyse the Management Report of the desired firm’s annual report to view what expectations the management has for the coming fiscal year. For large entities, who have many years of experience, this might be trivial – but what about newly listed companies? The purpose of this master’s thesis is to research, analyse and discuss how newly listed publicly traded entities on the Danish stock exchange evolve and improve their accuracy, when it comes to future expectations in the annual report – and if accountants should have a bigger role in this field. This is done through quantitative analysis between different market caps, in addition to qualitative analysis of interviews with individuals, who possess relevant professional experience. The result of the analysis shows no correlation between an entity’s years on the stock exchange, and their ability to correctly predict future results. However, it will show that large entities historically exceed their expectations, and smaller entities often exceed or disappoint regarding their expectations. The analysis also shows that firms have vastly different ways of reporting on the previous year’s expectations. This leads to a discussion of ways to combat these differences, and a discussion of the accountant’s role in managing the firm’s expectations. We provide a solution in the form of stricter regulation regarding a firm’s future expectations and conclude that the biggest blocker for an increased involvement from the accountant, is the potential lawsuits that might follow. Finally we discuss why firms have a difficult time managing expectations. We conclude this is due to optimistic behaviour, chasing losses, attributing past success to their own ability, and an inability to account for world changing events. We end the thesis by criticising our own work and data, while bringing forth recommendations for how the topic can be researched further in the future.