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Rationale behind IPO Underpricing: Evidence from Asian REIT IPOs


  • Joseph T.L. Ooi
  • Masaki Mori
  • Woei‐Chyuan Wong


This article examines the rationale behind IPO underpricing using a sample of REIT IPOs in Asia. Although the IPOs registered an average initial return of 3.08%, the issuers were able to sell the IPO shares above their fundamental values by timing the listings in periods when existing REIT stocks are traded at a premium to their net asset values (NAV). An IPO could therefore be underpriced and yet produce a net gain for the issuer. The issuers’ net gain from IPO is, however, negatively related to long‐run performance of REIT IPOs.

Suggested Citation

  • Joseph T.L. Ooi & Masaki Mori & Woei‐Chyuan Wong, 2019. "Rationale behind IPO Underpricing: Evidence from Asian REIT IPOs," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(1), pages 104-137, March.
  • Handle: RePEc:bla:reesec:v:47:y:2019:i:1:p:104-137
    DOI: 10.1111/1540-6229.12243

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    Cited by:

    1. Robbie Lin & Chyi Lin Lee & Graeme Newell, 2019. "The significance of Residential REITs in Japan as an Institutionalized property sector," ERES eres2019_122, European Real Estate Society (ERES).
    2. Kanis Saengchote & Chittisa Charoenpanich, 2020. "Cash flow uncertainty and IPO underpricing: Evidence from Thai REITs," PIER Discussion Papers 138, Puey Ungphakorn Institute for Economic Research, revised May 2020.

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