Terrorism and acquisition decision: Evidence from real estate investment trusts

Kang Mo Koo and Jeongseop Song

Finance Research Letters, 2025, vol. 80, issue C

Abstract: Amid escalating geopolitical conflicts, terrorism has disrupted economic stability and investor sentiment, necessitating comprehensive investigation. This research examines its impact on REIT acquisitions using major terrorism events as a quasi-natural experiment. We find that terrorism events significantly reduce acquisitions, with nearby REITs experiencing a notable deterrent impact. A dynamic analysis reveals a sharp decline in acquisition activity in the year of terrorism events, with the effect dissipating in subsequent years, indicating a short-lived salience effect. These results highlight the impact of terrorism-induced uncertainty on acquisition decisions and offer insights into behavioral responses to external shocks.

Keywords: Terrorism; Real estate investment trust; Salience effect; Real estate acquisition; Pessimism (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 G23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:80:y:2025:i:c:s154461232500666x

DOI: 10.1016/j.frl.2025.107406

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