Rationale Behind IPO Underpricing: Evidence from Asian REIT IPOs

34 Pages Posted: 20 Feb 2019

See all articles by Joseph T. L. Ooi

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate

Masaki Mori

National University of Singapore

Woei Chyuan Wong

Universiti Utara Malaysia

Date Written: Spring 2019

Abstract

This article examines the rationale behind IPO underpricing using a sample of REIT IPOs in Asia. Although the IPOs registered an average initial return of 3.08%, the issuers were able to sell the IPO shares above their fundamental values by timing the listings in periods when existing REIT stocks are traded at a premium to their net asset values (NAV). An IPO could therefore be underpriced and yet produce a net gain for the issuer. The issuers’ net gain from IPO is, however, negatively related to long‐run performance of REIT IPOs.

Suggested Citation

Ooi, Joseph T. L. and Mori, Masaki and Wong, Woei Chyuan, Rationale Behind IPO Underpricing: Evidence from Asian REIT IPOs (Spring 2019). Real Estate Economics, Vol. 47, Issue 1, pp. 104-137, 2019, Available at SSRN: https://ssrn.com/abstract=3335359 or http://dx.doi.org/10.1111/1540-6229.12243

Joseph T. L. Ooi (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Masaki Mori

National University of Singapore ( email )

Department of Real Estate
4 Architecture Drive
Singapore, 117566
Singapore

Woei Chyuan Wong

Universiti Utara Malaysia ( email )

Malaysia

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