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The Wealth Effects of Corporate Real Estate Leasing

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Abstract

This paper resents an event-time study of the wealth effects associated with the corporate decision to lease real estate assets. The analysis provides a measure of the valuation consequences of real estate lease transactions for corporate lessees to determine whether such transactions offer a net benefit to lessees in terms of a common stock price change. Examining a sample of sixty-seven corporate lease announcements reveals that positive abnormal returns accrue to the lessee firm and suggests that, on average, real estate leasing decisions benefit the corporate stockholders. We interpret these findings as consistent with the hypothesis that managers, in making real estate lease decisions, seek to maximize firm value.

Suggested Citation

  • Marcus T. Allen & Ronald C. Rutherford & Thomas M. Springer, 1993. "The Wealth Effects of Corporate Real Estate Leasing," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 567-578.
  • Handle: RePEc:jre:issued:v:8:n:4:1993:p:567-578
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    Cited by:

    1. Jin-Ray Lu & Chih-Chiang Huang, 2015. "Identifying Stock Market Reactions to Acquisition Announcements in Taiwan Land Auction," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(8), pages 1014-1028, August.
    2. Chris Manning & Stephen E. Roulac, 2001. "Lessons from the Past and Future Directions for Corporate Real Estate Research," Journal of Real Estate Research, American Real Estate Society, vol. 22(1/2), pages 7-58.
    3. Noriko Ashiya, 2015. "Determinants of Potential Seller/Lessee Benefits in Sale¡VLeaseback Transactions," International Real Estate Review, Asian Real Estate Society, vol. 18(1), pages 89-112.
    4. Christopher Heywood & Monique Arkesteijn, 2017. "Meta-Corporate Real Estate Management: Some preliminary thoughts," ERES eres2017_180, European Real Estate Society (ERES).
    5. Julan Du & Charles Ka Yui Leung & Derek Chu, 2014. "Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings," International Real Estate Review, Asian Real Estate Society, vol. 17(3), pages 301-357.
    6. Anna-Liisa Lindholm & Karen M. Gibler & Kari I. Levainen, 2006. "Modelling the Value Adding Attributes of Real Estate to the Wealth Maximization of the Firm," Journal of Real Estate Research, American Real Estate Society, vol. 28(4), pages 445-476.
    7. Fayez A. Elayan & Thomas O. Meyer & Jingyu Li, 2006. "Evidence from Tax-Exempt Firms on Motives for Participating in Sale-Leaseback Agreements," Journal of Real Estate Research, American Real Estate Society, vol. 28(4), pages 381-410.

    More about this item

    JEL classification:

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

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