RED HERRING Definition

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RED HERRING is a preliminary registration statement describing the issue (the IPO) and prospects of the company that must be filed with the SEC or provincial securities commission. There is no price or issue size stated in the red herring. Red Herrings are sometimes updated several times before it is called the final prospectus. It is known as a red herring because it contains a statement typed in red that the company is not attempting to sell their shares before the registration is approved by the SEC.

Learn new Accounting Terms

RESOURCE ABSORPTION, in business, is the depletion of the finite resources available to a company, i.e., labor, machinery, materials, etc.

BRANCH ACCOUNTING is accounting for geographically separated sections of enterprises. The accounting system adopted depends upon the degree to which the branch is controlled from its head office.

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