Sponsor Backing in Asian REIT IPOs

Rationale behind IPO Underpricing: Evidence from Asian REIT IPOs

“…Other studies that examine the pricing of REIT IPOs also recorded first day returns that are generally much lower than those observed for common IPOs (Wang, Chan and Gau , Below, Zaman and McIntosh , Ling and Ryngaert , Brounen and Eichholtz , Wong, Ong and Ooi ).…”

Asia Pacific Listed Real Estate: A Contextual Performance Analysis

“…Wong et al (2013) find that an increase in sponsor ownership leads to a higher level of IPO underpricing. This is indicative of the potential moral hazard problems that are associated with the sponsors in the aftermarket.…”

The Role of Sponsor and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore

“…In particular, we are interested in how the characteristics of these Asian-Pacific REITs differ from their U.S. / European counterparts and how these differences could affect capital structure choices. Prior research (e.g., Ooi et al 2006;Wong et al 2013;Lecomte and Ooi 2013) show that Asian-Pacific REITs have several unique features that are substantially different from REITs in other regions, in particular the U.S. 3 We conjecture two factors that could have a significant impact on leverage and maturity of Asian-Pacific REITs: the presence of sponsors and the management structure of REITs.…”

“…Extant finance literature (e.g., Barry et al 1990;Megginson and Weiss 1991) argue that reputable sponsors provide quality certification which reduces information asymmetry in the IPO market. Recently, Wong et al (2013) test whether sponsors in Asian REIT IPOs alleviate moral hazard concerns. They find a positive and significant bi-directional relationship between the fraction of shares held by the sponsor in IPO and the level of underpricing, implying the presence of a sponsor indicates to the market that the REIT has the support and guidance of an experienced market participant.…”