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Corporate Restructuring Involving Real Estate Assets: Some Earnings and Risk Signal Implications

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Abstract

Changes in common stockholder wealth when companies announce purchases and sales of real estate assets may result from changing investor perceptions about the risk, timing and/or amount of future cash flows. The evidence suggests that neither sellers nor buyers experience changes in firm risk for these transactions. However, sellers experience positive cash flow changes in the announcement year while buyers experience positive cash flow changes in the following year. Finally, for one-time purchasers, our study provides evidence that the lower the earnings performance compared with expectations in the announcement year, the greater the prediction errors.

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  • Donald G. Christensen & Donald R. Levi, 1993. "Corporate Restructuring Involving Real Estate Assets: Some Earnings and Risk Signal Implications," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 579-596.
    • Handle: RePEc:jre:issued:v:8:n:4:1993:p:579-596
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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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