The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts

41 Pages Posted: 24 Nov 2002

See all articles by Jay C. Hartzell

Jay C. Hartzell

University of Texas at Austin - Department of Finance

Crocker H. Liu

Arizona State University

Jarl G. Kallberg

New York University (NYU) - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: March 23, 2004

Abstract

This study analyzes the impact of corporate governance structures at the initial public offering date. We test hypotheses that firms with more shareholder-oriented governance structures receive higher valuations at the IPO stage, attract more institutional ownership, and have better long-term performance. Our IPO sample is restricted to a set of 107 real estate investment trusts (REITs) over the 1991 to 1998 time period. 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 not only have higher initial IPO valuations, but also have better long-term operating performance than their peers.

Keywords: IPO, Corporate Governance, REITs, Compensation

JEL Classification: G14, G32, G34, D82, L14

Suggested Citation

Hartzell, Jay C. and Liu, Crocker H. and Kallberg, Jarl G. (Jerry), The Role of Corporate Governance in Initial Public Offerings: Evidence from Real Estate Investment Trusts (March 23, 2004). Available at SSRN: https://ssrn.com/abstract=342700 or http://dx.doi.org/10.2139/ssrn.342700

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/

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

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)

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