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M&A in the Construction Industry -Wealth Effects of Diversification into Real Estate Life Cycle Related Services

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Author Info

  • Nico Rottke

    ()
    (EBS Universitat fur Wirtschaft und Recht i.Gr., Gustav-Stresemann-Ring 3, 65189 Wiesbaden, Germany)

  • Dirk Schiereck

    ()
    (Technische Universitat Darmstadt, Hochschulstr. 1, 64289 Darmstadt, Germany)

  • Stephan Pauser

    ()
    (EBS Universitat fur Wirtschaft und Recht i.Gr., Gustav-Stresemann-Ring 3, 65189 Wiesbaden, Germany)

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    Abstract

    Since the late 1990s, the construction industry has undergone a change in business model, as contractors vertically expand their operations to other parts of the real estate life cycle. The question arises on whether construction companies have superior abilities as real estate service providers. We have examined the value implications of 106 large merger and acquisition (M&A) transactions in the construction industry worldwide from 1986 to 2006. We inquire if a vertical expansion of the construction value chain in the real estate life cycle through M&A leads to the creation of shareholder value. We find out that this is not the case. M&A success is mainly determined by industry-specific size effects and common agency conflicts.

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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 14 (2011)
    Issue (Month): 3 ()
    Pages: 283-310

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    Handle: RePEc:ire:issued:v:14:n:03:2011:p:283-310

    Contact details of provider:
    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
    Email:
    Web page: http://www.asres.org/

    Order Information:
    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
    Email:
    Web: http://www.asres.org/

    Related research

    Keywords: Construction industry; Cross-border acquisitions; Bidder gains; Global diversification;

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    References

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