38 Pages Posted: 21 Jul 2010 Last revised: 26 Jan 2016
Date Written: May 29, 2010
This study contributes new evidence to distinguish why mergers occur in the real estate industry by quantifying the combined firm return for nearly three decades of real estate mergers. As a measure of the overall change in shareholder wealth created by a merger, the combined firm return plays a key role in differentiating competing merger theories and is quantified for the real estate industry for the first time. Findings from this study are consistent with the notion that real estate mergers occur because firms with superior management acquire other firms that possess unexploited opportunities to cut costs and increase earnings (the inefficient management hypothesis). Furthermore, the results indicate that real estate mergers generally create wealth, as shareholders at best realize modest gains and at worst break even.
Keywords: merger, acquisitions, Real Estate Investment Trusts, REITs
JEL Classification: G34, G14, L85
Suggested Citation: Suggested Citation
Womack, Kiplan S., Real Estate Mergers: Corporate Control & Shareholder Wealth (May 29, 2010). Journal of Real Estate Finance and Economics, Vol. 44, No. 4, 2012. Available at SSRN: https://ssrn.com/abstract=1645964