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The Wealth Effects of Real Estate Spin-Offs

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Abstract

This study examines the wealth effects surrounding the separation of real estate operations via spin-off. Parent firms of spin-offs in this sample experienced a significant abnormal two-day return of 3.195% for days - 1 and 0 of the announcement data in the Wall Street Journal. Tracking the performance of the spun off firms and the parent firms that survived for twenty-four months after the spin-off showed that neither the portfolio of subsidiaries nor the portfolio of parent firms earned returns significantly different from the market portfolio.

Suggested Citation

  • Jay N. Ball & Ronald C. Rutherford & Ron J. Shaw, 1993. "The Wealth Effects of Real Estate Spin-Offs," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 597-606.
  • Handle: RePEc:jre:issued:v:8:n:4:1993:p:597-606
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    References listed on IDEAS

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    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    3. Miles, James A & Rosenfeld, James D, 1983. " The Effect of Voluntary Spin-Off Announcements on Shareholder Wealth," Journal of Finance, American Finance Association, vol. 38(5), pages 1597-1606, December.
    4. William B. Brueggeman & Jeffrey D. Fisher & David M. Porter, 1990. "Rethinking Corporate Real Estate," Journal of Applied Corporate Finance, Morgan Stanley, vol. 3(1), pages 39-50.
    5. John L. Glascock & Wallace N. Davidson & C. F. Sirmans, 1991. "The Gains from Corporate Selloffs: The Case of Real Estate Assets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(4), pages 567-582.
    6. Ambrose, Brent William, 1990. "Corporate Real Estate's Impact on the Takeover Market," The Journal of Real Estate Finance and Economics, Springer, vol. 3(4), pages 307-322, December.
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    Cited by:

    1. Christopher Heywood & Monique Arkesteijn, 2017. "Meta-Corporate Real Estate Management: Some preliminary thoughts," ERES eres2017_180, European Real Estate Society (ERES).
    2. Chris Manning & Stephen E. Roulac, 1999. "Corporate Real Estate Research within the Academy," Journal of Real Estate Research, American Real Estate Society, vol. 17(3), pages 265-280.

    More about this item

    JEL classification:

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

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