Rationale behind IPO Underpricing: Evidence from Asian REIT IPOs

Joseph Ooi (), Masaki Mori and Woei‐Chyuan Wong

Real Estate Economics, 2019, vol. 47, issue 1, 104-137

Abstract: This article examines the rationale behind IPO underpricing using a sample of REIT IPOs in Asia. Although the IPOs registered an average initial return of 3.08%, the issuers were able to sell the IPO shares above their fundamental values by timing the listings in periods when existing REIT stocks are traded at a premium to their net asset values (NAV). An IPO could therefore be underpriced and yet produce a net gain for the issuer. The issuers’ net gain from IPO is, however, negatively related to long‐run performance of REIT IPOs.

Date: 2019
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https://doi.org/10.1111/1540-6229.12243

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