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An Examination Of Primary And Secondary Market Returns In Equity Reit Ipos

Author

Listed:
  • SINAN GOKKAYA

    (Ohio University)

  • MICHAEL J. HIGHFIELD

    (Mississippi State University)

  • KENNETH D. ROSKELLEY

    (Mississippi State University)

  • DENNIS F. STEELE

    (Southern Adventist University)

Abstract

We examine primary and secondary market returns for REIT initial public offerings (IPOs). Consistent with theories regarding compensation for information production during the roadshow, we find offer-to-open returns are directly related to partial adjustment and are significantly lower for REITs holding assets in a single-property type. Matching REIT IPOs to comparable non-REIT IPOs, we also find evidence consistent with demand uncertainty. Specifically, after controlling for issue and firm characteristics, REITs post significantly lower secondary market returns despite similar primary market returns. This suggests that demand uncertainty resolves more quickly for REITs, possibly due to higher relative transparency.

Suggested Citation

  • Sinan Gokkaya & Michael J. Highfield & Kenneth D. Roskelley & Dennis F. Steele, 2015. "An Examination Of Primary And Secondary Market Returns In Equity Reit Ipos," Journal of Real Estate Research, American Real Estate Society, vol. 37(1), pages 23-64.
    • Handle: RePEc:jre:issued:v:37:n:1:2015:p:23-64
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    Citations

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    Cited by:

    1. David C. Ling & Gianluca Marcato & Chen Zheng, 2022. "Does asset location and concentration explain REIT IPO valuation?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(3), pages 672-706, September.
    2. Dan W. French & Thibaut G. Morillon & Adam S. Yore & Andrew E. Kern, 2023. "The impact of exchange listing on corporate governance: Evidence from direct listings," The Financial Review, Eastern Finance Association, vol. 58(2), pages 197-234, May.
    3. Elizabeth Devos & Erik Devos & Seow Eng Ong & Andrew C. Spieler, 2019. "Information Asymmetry and REIT Capital Market Access," The Journal of Real Estate Finance and Economics, Springer, vol. 59(1), pages 90-110, July.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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