IPO Spillover Effects in a New and Uncertain Sector: The Case of a Marijuana REIT

30 Pages Posted: 21 Feb 2017 Last revised: 9 Jun 2018

See all articles by Ran Lu-Andrews

Ran Lu-Andrews

California Lutheran University, School of Management

Date Written: February 15, 2017

Abstract

We examine the IPO spillover effects using the case of Innovative Industrial Properties (IIPR). IIPR, as a new REIT firm that focuses on marijuana facilities, provides a unique opportunity to study both the contagion effects and competition effects within the REIT industry and the marijuana industry. We find that direct competing firms, such as healthcare REITs and marijuana stocks, are affected more by IIPR IPO than indirect competing firms. By investigating the price reactions to the announcement date, the downsize date, and the IPO completion date from IIPR’s competitors, we show that healthcare REITs and marijuana stocks experience negative abnormal returns during the event periods. The results suggest that the negative externalities from IIPR IPO might be due to the high level of uncertainty associated with the marijuana industry.

Keywords: REIT, IPO, Spillover Effect, Uncertain Industry, Marijuana

JEL Classification: G1, G38, D83

Suggested Citation

Lu-Andrews, Ran, IPO Spillover Effects in a New and Uncertain Sector: The Case of a Marijuana REIT (February 15, 2017). Available at SSRN: https://ssrn.com/abstract=2919746 or http://dx.doi.org/10.2139/ssrn.2919746

Ran Lu-Andrews (Contact Author)

California Lutheran University, School of Management ( email )

60 W. Olsen Road
School of Management
Thousand Oaks, CA California 91360
United States

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