The Pricing of Property Trust IPOs in Australia
Deakin University - School of Accounting, Economics and Finance
Robert Darren Brooks
Monash University; Financial Research Network (FIRN)
Journal of Real Estate Finance and Economics, Vol. 32, No. 2, 2006
Following Brounen and Eichholtz (2002) this paper adds to the international literature investigating the underpricing of REIT initial public offerings (IPOs), with a study into Australian property trusts. This study finds that initial day returns can in part be explained by forecast profit distributions (or dividends) and the market sentiment towards property trusts from the date of the prospectus to the date of listing. There is some support for the winners curse explanation of underpricing with evidence that large investor or institutional involvement at the outset of the IPO also has some explanatory power.
Keywords: initial public offerings (IPOs), Property trusts, REITs, REIT pricingAccepted Paper Series
Date posted: September 9, 2005
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