Soft Information and the Underpricing of REIT Seasoned Equity Offerings

James C. Brau, J. Troy Carpenter, James E. Cicon and Shelly Howton

Journal of Real Estate Portfolio Management, 2021, vol. 27, issue 2, 137-148

Abstract: Using a sample of 1,429 seasoned equity offerings (SEOs) by real estate investment trusts (REITs), we use content analysis to test whether the soft information in a company's offering prospectus influences SEO underpricing. After controlling for relevant variables, we find that companies that use more positive (negative) words in their filings are negatively (positively) related to SEO underpricing. We posit that in REIT SEOs more positive and fewer negative words decrease investor pricing uncertainty (fear) of the offer and as a result experience less underpricing.

Date: 2021
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DOI: 10.1080/10835547.2021.2008591

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