Valuation uncertainty, institutional involvement, and the underpricing of IPOs: the case of REITs

Article Abstract:

Initial public offerings (IPO) of common stocks generate about 16% of the company's return on the first day of trading. This initial underpricing is intended for the "winner's curse," or the less-informed investors, who avoid overpriced issues. The real estate investment trust (REIT) IPO was a breakaway in this case, as its return declines to 2.82% on the first day of trading during the period 1971-1988, as documented by Wang, Chan, and Gau. The decline was due to unsophisticated investor marketing, and an uninformed investing public overpaying traded claims on commercial real estates.

Real estate investment trusts, Real Estate Invest Trusts

---

Initial public offerings of equity securities: anomalous evidence using REITs

Article Abstract:

An analysis of initial public offerings (IPOs) is presented. The analysis is based on a sample of 87 IPOs of real estate investment trusts (REITs) covering the 1971-1988 period. Analysis shows that sample data exhibited a statistically significant average return of -2. 82% for the period's initial trading day. The overpricing result, which does not conform to earlier findings of underpricing, is invariant to offer price, issue size, distribution method, offer period and underwriter reputation.

Usage, Evaluation

---

Do strategic alliance create value?

Article Abstract:

A study of stock price responses to the creation of 345 strategic alliances in the period 1983-1992 showed a positive stock price response and the absence of wealth transfer. Companies that participate in strategic alliances are found to have a high operating performance as compared to other firms in the same industry. These alliances can also result to the creation of value to the same extent for both partner firms.

Partnerships, Economic aspects, Partnership, Strategic alliances (Business)

Similar abstracts:

• Abstracts: Litigation costs and the underpricing of initial public offerings. Personal taxes and the underpricing of initial public offerings
• Abstracts: On aggregation of information in competitive markets: the dynamic case. Market efficiency and inefficiency in rational expectations equilibria: dynamic effect of heterogenous information and noise
• Abstracts: Strategic management under duopoly. In defense of corporate myopia. Organizational structure and the internal economy of the firm: the UK insurance industry
• Abstracts: Comment on H. Genberg and A. Swoboda, "Saving, investment and the current account." Comment on J.I. Bernstein, "Information Spillovers, Margins, Scale and Scope: with an Application to Canadian Life Insurance." (response to article by Jeffrey I. Bernstein in this issue, p.S95)
• Abstracts: Investment in salvage equipment. Do some firms rely on the owners' preferences instead of sunk investments to guarantee performance?

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.