Please use this identifier to cite or link to this item: https://doi.org/10.1007/s11146-011-9336-x
Title: Sponsor Backing in Asian REIT IPOs
Authors: Wong, W.-C.
Ong, S.-E. 
Ooi, J.T.L. 
Keywords: Developer IPOs
IPO sponsor
Moral Hazard
Signaling
Underpricing
Issue Date: 2013
Source: Wong, W.-C., Ong, S.-E., Ooi, J.T.L. (2013). Sponsor Backing in Asian REIT IPOs. Journal of Real Estate Finance and Economics 46 (2) : 299-320. ScholarBank@NUS Repository. https://doi.org/10.1007/s11146-011-9336-x
Abstract: 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. © 2011 Springer Science+Business Media, LLC.
Source Title: Journal of Real Estate Finance and Economics
URI: http://scholarbank.nus.edu.sg/handle/10635/46249
ISSN: 08955638
DOI: 10.1007/s11146-011-9336-x
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