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Sponsor backing in Asian REIT IPOs

Wong, Woei Chyuan and Ong, Seow-Eng and Ooi, Joseph T. L. (2013) Sponsor backing in Asian REIT IPOs. The Journal of Real Estate Finance and Economics, 46 (2). pp. 299-320. ISSN 0895-5638

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This paper tests the significance of sponsors in REIT IPOs viz-a-viz quality certification, signal of firm value, and commitment to alleviate moral hazard concerns. We model the REIT pricing and sponsor share retention decisions within a simultaneous decision framework as motivated by Grinblatt and Hwang (Journal of Finance 44:393–420, 1989).We find positive and significant bidirectional relationship between the fraction of shares held by the sponsor in IPO and underpricing which is consistent with Grinblatt and Hwang’s (Journal of Finance 44:393–420, 1989) signaling model. Our results also support the commitment hypothesis that developers that spin off REITs tend to hold more shares at IPO, possibly to compensate investors for the potential moral hazard problems in the aftermarket.

Item Type: Article
Uncontrolled Keywords: Underpricing; Signaling; IPO sponsor; Moral Hazard; Developer IPOs
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Dr. Woei Chyuan Wong
Date Deposited: 09 Sep 2015 01:02
Last Modified: 19 Apr 2016 03:43
URI: http://repo.uum.edu.my/id/eprint/15427

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