Abstract:
Purpose: The purpose of this thesis is to shed more light on the impact of corporate
governance mechanisms on the Initial Public Offering (IPO) performance of U.S. Equity
Real Estate Investment Trusts (REIT) in the short and long run.
Design/methodology/approach: I conduct multi-linear regressions on a sample of 89 US
REIT IPO for the years 2003 to 2016. I compute the market adjusted excess returns for
each of the first 5 days following the IPO to measure short-run IPO performance and the
semi-annual cumulative abnormal returns for each of the three years following the IPO to
measure long-run IPO performance.
Findings: We find that U.S. REIT IPOs, mainly IPOs with relatively small asset size,
exhibit short run underpricing and long run overperformance. However, the overall level
of underpricing for U.S. REIT IPOs is not very significant. REITs that adopt strong
corporate governance structures receive high IPO valuations in the short run. We find
mixed results regarding the relation between long-run IPO performance and corporate
governance.
Research limitations/implications: The first limitation is that more robustness tests
could have been made. The second limitation is using only two performance measures,
although there is a broad set of approaches that could be used to measure the impact of
corporate governance mechanisms on IPO performance such as offer-to-open returns,
open-to-close returns, buy and hold returns and wealth relative ratio.
Practical implications: This study will help REIT firms that are planning to go public
understand the effect of certain corporate governance mechanisms on their expected IPO
performance.
Originality/value: This thesis evaluates the effect of corporate governance on the short-run
and long-run U.S. Equity REIT IPO returns.
Description:
MSFRM -- Faculty of Business Administration and Economics, Notre Dame University, Louaize, 2018; "A thesis submitted in partial fulfillment of the requirements for the degree of the Master of Science in Financial Risk Management"; Includes bibliographical references (leaves 69-76).