Beyond friendly acquisitions: the case of REITs

Chiuling Lu (), Tzujui Mao () and Yang-pin Shen ()

Review of Quantitative Finance and Accounting, 2015, vol. 44, issue 1, 139-159

Abstract: Unlike operating companies, acquisitions between Real Estate Investment Trusts (REITs) are friendly and acquirers have been previously found to experience positive announcement effects. This study looks beyond stock response and long term performance and finds that overconfidence motivates REIT managers to acquire other firms or assets within the industry. We find that larger, more profitable, and less transparent REITs with fewer growth opportunities are more likely to become acquirers. We further find that top managers tend to personally buy more shares prior to the acquisition announcement and then sell more shares afterward. Our empirical evidence lends support to the hubris hypothesis. Copyright Springer Science+Business Media New York 2015

Keywords: Acquisitions; Real Estate Investment Trusts; Announcement effect; Long-term performance; Insider trading; Hubris hypothesis; G34; G31 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11156-013-0409-1

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