Cash to Spend: IPO Wealth and House Prices

Forthcoming, Real Estate Economics

76 Pages Posted: 16 Feb 2019 Last revised: 1 Aug 2022

See all articles by Barney Hartman-Glaser

Barney Hartman-Glaser

University of California, Los Angeles (UCLA) - Anderson School of Management

Mark Thibodeau

Florida International University (FIU) - Hollo School of Real Estate

Jiro Yoshida

Pennsylvania State University - Smeal College of Business; The University of Tokyo - Graduate School of Economics

Date Written: July 18, 2022

Abstract

This study demonstrates the impact of initial public offerings (IPOs) on local house prices. Applying spatial difference-in-differences methods to IPOs in California from 1993 to 2017, we find house prices increase by 0.7% to 0.9% near an IPO firm’s headquarters around filing and issuing dates. Upon lock-up expiration, price changes depend on post-issuance returns. Treating the San Francisco Bay as a commuting barrier, we identify sustained price increases after filings and temporary increases after issuing and lock-up expiration. We also confirm post-IPO price divergence between the treatment and synthetic control areas. Our findings indicate the effect of liquid wealth under mild financial constraints.

Keywords: Initial Public Offerings, Financial Constraints, Executive Compensation, Liquidity, Spatial Difference-In-Differences, Synthetic Control Methods

JEL Classification: L26, M12, J33, R21

Suggested Citation

Hartman-Glaser, Barney and Thibodeau, Mark and Yoshida, Jiro, Cash to Spend: IPO Wealth and House Prices (July 18, 2022). Forthcoming, Real Estate Economics, Available at SSRN: https://ssrn.com/abstract=3329651 or http://dx.doi.org/10.2139/ssrn.3329651

Barney Hartman-Glaser

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Mark Thibodeau

Florida International University (FIU) - Hollo School of Real Estate ( email )

Miami, FL 33199
United States

Jiro Yoshida (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

368 Business Building
Smeal College of Business
University Park, PA 16802
United States
814-865-0392 (Phone)
814-865-6284 (Fax)

HOME PAGE: http://www.personal.psu.edu/juy18

The University of Tokyo - Graduate School of Economics ( email )

7-3-1 Hongo
Bunkyo-ku, Tokyo 113-0033
Japan
813-5841-5653 (Phone)
813-5841-5521 (Fax)

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