Do REIT Repurchases Signal Value Changes in Rivals? An Analysis of the Stock Price Reaction of Non-Repurchasing REITs

24 Pages Posted: 8 Jan 2009 Last revised: 20 Jan 2009

See all articles by Dean Diavatopoulos

Dean Diavatopoulos

Seattle University

Andy Fodor

Ohio University

Shawn D. Howton

Villanova University - Department of Finance

Shelly Howton

Villanova University - School of Business

Date Written: January 7, 2009

Abstract

We examine REITs at the announcement of plans for open market repurchases and determine the impact of these announcements on competing REITs. Consistent with prior research, we find evidence of significant positive returns to the repurchasing firms, on average, at announcement. We do not find evidence of a significant reaction for rival REITs. When we divide the sample based on sign of the announcement day returns to the repurchasing REITs, we find the impact for rivals differs. When there is a positive announcement effect for the repurchasing REIT, rivals do not react. When there is a negative announcement effect for the repurchasing REIT, rivals also have significant negative returns.

Keywords: REIT, Open Market Repurchase, Information Asymmetry

Suggested Citation

Diavatopoulos, Dean and Fodor, Andy and Howton, Shawn D. and Howton, Shelly W., Do REIT Repurchases Signal Value Changes in Rivals? An Analysis of the Stock Price Reaction of Non-Repurchasing REITs (January 7, 2009). Available at SSRN: https://ssrn.com/abstract=1324322 or http://dx.doi.org/10.2139/ssrn.1324322

Dean Diavatopoulos

Seattle University ( email )

901 12th Avenue
Seattle, WA 98122
United States

Andy Fodor

Ohio University ( email )

514 Copeland Hall
Athens, OH 45701
United States
740.593.0259 (Phone)

Shawn D. Howton

Villanova University - Department of Finance ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States

Shelly W. Howton (Contact Author)

Villanova University - School of Business ( email )

Dept. of Finance
Villanova, PA 19085
United States
610-519-6111 (Phone)
610-519-6881 (Fax)

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