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

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)

Registered author(s):

    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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    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
    Web page: http://www.asres.org/Email:

    Order Information: Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Keywords: Construction industry; Cross-border acquisitions; Bidder gains; Global diversification;

    Find related papers by JEL classification:

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

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