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Terrorism and acquisition decision: Evidence from real estate investment trusts

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  • Koo, Kang Mo
  • Song, Jeongseop

Abstract

Amid escalating geopolitical conflicts, terrorism has disrupted economic stability and investor sentiment, necessitating comprehensive investigation. This research examines its impact on REIT acquisitions using major terrorism events as a quasi-natural experiment. We find that terrorism events significantly reduce acquisitions, with nearby REITs experiencing a notable deterrent impact. A dynamic analysis reveals a sharp decline in acquisition activity in the year of terrorism events, with the effect dissipating in subsequent years, indicating a short-lived salience effect. These results highlight the impact of terrorism-induced uncertainty on acquisition decisions and offer insights into behavioral responses to external shocks.

Suggested Citation

  • Koo, Kang Mo & Song, Jeongseop, 2025. "Terrorism and acquisition decision: Evidence from real estate investment trusts," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s154461232500666x
    DOI: 10.1016/j.frl.2025.107406
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    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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