The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts
Posted: 20 Oct 2008
There are 2 versions of this paper
The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts
Date Written: August 1, 2008
Abstract
This study analyzes the impact of corporate governance structures at the initial public offering (IPO) date. We test hypotheses that firms with more shareholder-oriented governance structures receive higher valuations at the IPO stage and have better long-term performance. Our sample is a set of 107 IPOs of real estate investment trusts (REITs) between 1991 and 1998. Using a single industry and REITs in particular reduces potentially confounding effects due to differences in risk, transparency, and growth potential. We believe this - combined with our use of IPOs - mitigates the endogeneity problem present in studies of the impact of governance on seasoned firms' valuation. Our analysis indicates that firms with stronger governance structures have higher IPO valuations and better long-term operating performance than their peers.
Keywords: IPO, Corporate Governance, REIT, Incentive
JEL Classification: G14, G32, G34, D82, L14
Suggested Citation: Suggested Citation
Jay C. Hartzell (Contact Author)
University of Texas at Austin - Department of Finance ( email )
1 University Station B6600
Austin, TX 78712
United States
512-471-6779 (Phone)
512-471-5073 (Fax)
HOME PAGE: http://www.mccombs.utexas.edu/faculty/jay.hartzell/
Jarl G. (Jerry) Kallberg
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0339 (Phone)
212-995-4233 (Fax)
Crocker H. Liu
Arizona State University ( email )
W.P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-3259 (Phone)
480-965-8539 (Fax)
HOME PAGE: http://www.public.asu.edu/~chliu1