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The Wealth Effects of Domestic vs International Joint Ventures: The Case of Real Estate

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    Abstract

    This study examines the wealth effect of international versus domestic real estate joint ventures on the U.S. participating firm's shareholders. This is done using traditional even study methodology for real estate joint venture announcements. The results suggest that domestic real estate joint ventures generally result in a significant increase in the firm's value, while international real estate joint ventures usually have a much less significant to nonsignificant wealth impact. This may be due to the immovability of real properties in foreign countries and the large amount of initial investment in real estate that increase both political and economic risks for international real estate joint ventures. This study also finds that hotel joint ventures generally have a weaker wealth effect than non-hotel real estate joint ventures.

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    File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol13n03/v13p349.pdf
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    Bibliographic Info

    Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

    Volume (Year): 13 (1997)
    Issue (Month): 3 ()
    Pages: 349-358

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    Handle: RePEc:jre:issued:v:13:n:3:1997:p:349-358

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    Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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    Web page: http://www.aresnet.org/

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    Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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    Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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    1. Fayez A. Elayan, 1993. "The Announcement Effect of Real Estate Joint Ventures on Returns to Stockholders: An Empirical Investigation," Journal of Real Estate Research, American Real Estate Society, vol. 8(1), pages 13-26.
    2. Myron S. Scholes & Mark A. Wolfson, 1989. "The Effects of Changes in Tax Laws on Corporate Reorganization Activity," NBER Working Papers 3095, National Bureau of Economic Research, Inc.
    3. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    4. Lee, Insup & Wyatt, Steve B, 1990. "The Effects of International Joint Ventures on Shareholder Wealth," The Financial Review, Eastern Finance Association, vol. 25(4), pages 641-49, November.
    5. McConnell, John J & Nantell, Timothy J, 1985. " Corporate Combinations and Common Stock Returns: The Case of Joint Ventures," Journal of Finance, American Finance Association, vol. 40(2), pages 519-36, June.
    6. Darrough, Masako N & Stoughton, Neal M, 1989. "A Bargaining Approach to Profit Sharing in Joint Ventures," The Journal of Business, University of Chicago Press, vol. 62(2), pages 237-70, April.
    7. Claire Crutchley & Enyang Guo & Robert S. Hansen, 1991. "Stockholder Benefits From Japanese-U.S. Joint Ventures," Financial Management, Financial Management Association, vol. 20(4), Winter.
    8. R. Ravichandran & J. Sa-Aadu, 1988. "Resource Combination and Security Price Reactions: The Case of Real Estate Joint Ventures," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 16(2), pages 105-122.
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    Cited by:
    1. Moskalev, Sviatoslav A. & Swensen, R. Bruce, 2007. "Joint ventures around the globe from 1990-2000: Forms, types, industries, countries and ownership patterns," Review of Financial Economics, Elsevier, vol. 16(1), pages 29-67.
    2. Robert Campbell & Nancy White-Huckins & C. Sirmans, 2006. "Domestic and International Equity REIT Joint Ventures: Structuring Corporate Options," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 275-288, May.

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