Are Secondary Equity Offerings of BEE REITs Less Underpriced than Non-BEE REITs?

Oluwaseun Damilola Ajayi and Omokolade Akinsomi

AfRES from African Real Estate Society (AfRES)

Abstract: Purpose: Using real estate investment trusts as a unique laboratory, we investigate the impact of the Black Economic Empowerment policy on seasoned equity offering (SEO) price dynamics.Methodology: 52 SEOs issued by 29 REIT firms (based on availability of data) from January 1, 2010, to December 31, 2020 were retrieved from the Stock Exchange News Service (SENs) of the Johannesburg Stock Exchange (JSE).Findings: Using OLS regression in analysing our data, evidence indicates that BEE is positively related to SEO underpricing; in other words, SEOs of BEE compliant REITs are less underpriced compared to non-compliant BEE REITs.Implication: Evidence also suggests that the BEE policy needs to be recalibrated owing to its politicization as this will enhance compliance from REITs.Originality: This is a pioneer attempt at providing insights for subsequent studies of this nature.

Keywords: Black Economic Empowerment; Economic Policy; seasoned equity offerings; Underpricing (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2021-09-01
New Economics Papers: this item is included in nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
https://afres.architexturez.net/doc/oai-afres-id-2021-034 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:afr:wpaper:2021-034

Access Statistics for this paper

More papers in AfRES from African Real Estate Society (AfRES) Contact information at EDIRC.
Bibliographic data for series maintained by Architexturez Imprints ().