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Using REITs to Extricate the Effect of Managerial Signalling in Open Market Share Repurchase Announcements

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  • James C. Brau
  • Andrew Holmes

Abstract

This paper explores the effect of stock repurchase announcements on equity returns for publicly traded real estate investment trusts. The study of share repurchases in the context of real estate investment trusts provides a novel opportunity to disentangle the impact of competing theories for the abnormal returns observed around repurchase announcements. Prior literature advances six hypotheses to explain the stock price reaction associated with repurchases. The unique institutional attributes of real estate investment trusts negate the economic logic sustaining all of the hypotheses except the managerial signaling hypothesis. Hence, we are able to focus exclusively on assessing the impact of managerial signaling. After controlling for relevant economic variables, we provide evidence for the efficacy of the managerial signaling hypothesis in the context of open market share repurchases.

Suggested Citation

  • James C. Brau & Andrew Holmes, 2001. "Using REITs to Extricate the Effect of Managerial Signalling in Open Market Share Repurchase Announcements," ERES eres2001_123, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2001_123
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    References listed on IDEAS

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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