IPO Spillover Effects in a New and Uncertain Sector: The Case of a Marijuana REIT

Abstract

I examine the IPO spillover effects using the case of Innovative Industrial Properties (IIPR). IIPR, as a new REIT firm that focuses on marijuana real estate facilities, provides a unique opportunity to study both the contagion effects and competition effects within the REIT industry and the marijuana industry. I find that direct competing firms, such as healthcare REITs and marijuana stocks, are affected more by IIPR IPO than indirect competing firms. The results suggest that the negative externalities from IIPR IPO might be due to the high level of uncertainty associated with the marijuana industry.