Eres : Digital Library : Works

Paper eres2011_45:
Areit Bidder Returns an Evaluation of Public and Private Targets and Method of Payment

id eres2011_45
authors Ratcliffe, Chris; Dimovski, Bill
year 2011
title Areit Bidder Returns an Evaluation of Public and Private Targets and Method of Payment
source 18th Annual European Real Estate Society Conference in Eindhoven, the Netherlands
summary We examine the wealth effects of fifty-six Australian Real Estate Investment Trusts (A-REITs) acquirers around the announcement date of a merger and acquisition over the period of 1996 to 2010. Utilising event study methodology we find that bidding A-REITs earn positive and significant cumulative excess returns (CARs) of +0.966% around the three-day announcement period [-1,+1]. Analysis also indicates bidding firms earn higher CARs when the acquisition is financed by scrip and/or a combination of scrip and cash. Consistent with prior REIT research, event study results show that A-REIT acquirers earn higher excess returns when the target is private as compared to a public target, +2.834% and +0.457% respectively. Further investigation, employing regression analysis, shows book-to-market ratio has a negative impact on bidding firms CARs, suggesting low (high) book-to-market ratio firms are overvalued (undervalued). We also find that specialisation by property type has a positive and significant influence on bidder excess returns. Finally, our results show support for the method of payment findings in the event study, with method of payment returning a negative and significant impact on bidder CARs.
keywords real estate investment trusts reits, areits, mergers, acquisitions, abnormal returns, cumulative
series ERES:conference
email cratclif@deakin.edu.au
content file.ppt (1,298,944 bytes)
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ratings
session A1: Finance and Investment (I)
last changed 2011/07/16 16:26
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