The Performance of Acquisitions in the Real Estate Investment Trust Industry
This study examines the performance of acquisitions in the Real Estate Investment Trust (REIT) industry around the acquisition announcement and in the long-run. The results suggest that the acquiring REITs experience statistically signi?cant negative abnormal returns while the target REITs earn statistically signi?cant positive abnormal returns during the three-day period around the announcement. The long-run performance of the acquiring REITs is analyzed using size benchmark portfolios with the buy-and-hold, cumulative average and mean calendar time abnormal returns, as well as the Famaâ€“French Three Factor Model. None of the other methods detect signi?cant abnormal returns in the long-run with the exception of the buy-and-hold abnormal return. Further analysis shows that the long-run positive buy-and-hold abnormal return is consistent with an unexpected decline in cost of equity after acquisitions.
Volume (Year): 27 (2005)
Issue (Month): 3 ()
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