|Are Real Estate IPOs a Different Species?
Evidence from Hong Kong IPOs
Author: Su H. Chan, Mark H. Stohs, Ko Wang
Start Page: 337
Abstract: It is well documented
that in the United States, real estate investment trust (REIT) initial public offerings
(IPOs) have an abnormally low initial-day return when compared to that of industrial firm
IPOs. Researchers suspect that the abnormal return pattern of REIT IPOs is caused by their
unique real estate holdings. Examination of 399 IPOs issued in Hong Kong during the
1986-1997 period reveals strong evidence that suggests that underlying real estate
holdings cannot be the sole reason for the observed low initial-day return of REIT IPOs.
This investigation indicates that there is a need to re-think the current explanations for
the abnormal performance of REIT IPOs.