Pricing of IPOs under legally-mandated concentrated ownership and commitment period: Evidence from a natural experiment for REITs in Turkey

Signaling and commitment features, as embedded into the legal requirements for REIT IPOs, and a regime change in macroeconomic conditions, going from decades-long uncertainty to recent and unexpected stability, offer new insights into the pricing of REIT IPOs in Turkey. All REIT IPOs between 1996 and 2014 enter our sample. Increases beyond the legally mandated ownership percentage signal asset quality and lessen underpricing. This result differs from those for the non-REIT firms in Turkey and REITs elsewhere. Further, the regime change from macroeconomic uncertainty to stability generates a reversal from substantial underpricing to negligible underpricing/fair pricing