Premium
Long‐Term post‐merger announcement performance. A case study of Australian listed real estate
Author(s) -
Ratcliffe Chris,
Dimovski Bill,
Keneley Monica
Publication year - 2017
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12184
Subject(s) - real estate investment trust , business , shareholder , accounting , real estate , hubris , agency cost , term (time) , finance , investment (military) , financial crisis , financial system , monetary economics , economics , corporate governance , political science , physics , macroeconomics , quantum mechanics , politics , law , history , classics
This study examines the long‐term postmerger performance of Australian Real Estate Investment Trusts (A‐ REIT s). The A‐ REIT sector is used as a case study being less vulnerable to agency issues due to its regulatory structure (Eichholtz and Kok, 2008; Ratcliffe et al ., 2009). Research on conventional firms has shown, on average, shareholders are worse off in the long run (Alexandridis et al ., 2012). In contrast, we find that shareholders experience significantly positive abnormal returns, after accounting for the financial crisis. This outcome suggests that when managers are restricted with the use of retained earnings and the type of investment, they may be less susceptible to hubris and/or agency issues.