Property Investment and Property Development Firm Performance around Initial Public Offerings and Rights Offerings: U.K. Evidence
AbstractIn contrast to the well-documented underperformance of equity issuers, property investment firms undertaking initial public offerings and rights issues have performed indistinguishably from similar nonissuing firms. Property development companies that issued equity over the same period performed significantly worse than nonissuing firms. The major difference between property development and property investment firms is that property investment firms hold portfolios of real estate assets and thus have more certain prices. The lower pricing uncertainty of property investment firms results in normal long-run performance. Tests of the cognitive bias hypothesis provide only weak support of this explanation, while size and book-market effects are unable to account for the performance of property investment and development companies. The findings of underperformance for rights issues suggest that timing equity issues to take advantage of new shareholders may not be linked to the existence of cognitive bias. An important finding for the international growth in securitized real estate markets is that no evidence is found suggesting equity issues of securitized real estate firms should be avoided. Copyright 1999 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Real Estate Finance & Economics.
Volume (Year): 18 (1999)
Issue (Month): 2 (March)
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Web page: http://www.springerlink.com/link.asp?id=102945
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- Fabian Brämisch & Nico Rottke & Dirk Schiereck, 2011. "IPO underpricing, signaling, and property returns," Financial Markets and Portfolio Management, Springer, vol. 25(1), pages 27-51, March.
- Brounen, Dirk & Eichholtz, Piet, 2002. "Initial public offerings: evidence from the British, Frencj and Swedish property share markets," Open Access publications from Maastricht University urn:nbn:nl:ui:27-13972, Maastricht University.
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