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An Analysis of Seasoned Equity Offerings by Equity REITs, 1991 to 1995

Chinmoy Ghosh, Raja Nag and C F Sirmans

The Journal of Real Estate Finance and Economics, 1999, vol. 19, issue 3, 175-92

Abstract: This article examines the valuation effect around the filing and offer dates of seasoned equity offerings by Equity REITs over the period 1991 to 1995. Based on a much larger sample, our finding of a significantly negative reaction to filing announcements corroborates the evidence in Howe and Shilling (1988). Our analyses indicate that the valuation effect is impacted more by the information content of the filing than any tax-based explanations. We find a significantly negative valuation effect on the offer day as well. The effect persists even after adjustment of returns by the bid-ask bounce induced by excessive selling of shares in the secondary market by institutional investors to take advantage of offer price discounts. While we attribute the result partly to order flow imbalance around the offer day, this finding is inconsistent with extant literature merits and further investigation. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

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