Abnormal market return from real estate divestiture and acquisition announcements in a developing country
Real estate asset divestitures and acquisitions (D&A) are conducted as part of corporate restructuring. This study attempts to fill the knowledge gap on abnormal market return (AR) towards D&A activities during recession in a developing country. The samples are Malaysian listed non-real esta...
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| Main Authors: | , , |
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| Format: | Conference or Workshop Item |
| Published: |
2013
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| Subjects: | |
| Online Access: | http://eprints.utm.my/id/eprint/37197/ https://www.researchgate.net/publication/283494835_Abnormal_Market_Return_from_Real_Estate_Divestiture_and_Acquisition_Announcements_in_a_Developing_Country |
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| Summary: | Real estate asset divestitures and acquisitions (D&A) are conducted as part of corporate restructuring. This study attempts to fill the knowledge gap on abnormal market return (AR) towards D&A activities during recession in a developing country. The samples are Malaysian listed non-real estate companies that conducted D&A during the 2008 financial crisis. Event study methodology is used to determine AR surrounding D&A announcements within (-10day, +10day) event window. Results show that both D&A announcements bring insignificant AR on and near the announcement date (-1 to +1). Prior to announcement, divesting (acquiring) companies incur negative (positive) AR, indicating that any leakage of information on divestiture (acquisition) is not favored (favored) by the market. Post-announcement results show that divesting companies continued to experience negative ARs even though majority of such companies divested at premium prices. However, acquiring companies experience significant and negative post-announcement AR. This is plausibly due to the majority of acquiring companies paid a premium above valuation for their acquisitions. In summary, the market frowns upon divestitures in general and acquisitions of real estate assets above their valuations during economic recessions. |
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