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.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1997
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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.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1992
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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.
Publication Name: Journal of Financial Economics
Subject: Economics
ISSN: 0304-405X
Year: 1997
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