Open AccessInternational Real Estate Review
Author(s) -
Nico B. Rottke,
Dirk Schiereck,
Stephan Pauser
Publication year - 2011
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100143
Subject(s) - real estate , business , value (mathematics) , shareholder , shareholder value , agency (philosophy) , service (business) , business cycle , real estate investment trust , industrial organization , finance , estate , marketing , economics , computer science , macroeconomics , corporate governance , philosophy , epistemology , machine learning
Since the late 1990s, the construction industry has undergone a change in business model, as contractors vertically expand their operations to other parts of the real estate life cycle. The question arises on whether construction companies have superior abilities as real estate service providers. We have examined the value implications of 106 large merger and acquisition (M&A) transactions in the construction industry worldwide from 1986 to 2006. We inquire if a vertical expansion of the construction value chain in the real estate life cycle through M&A leads to the creation of shareholder value. We find out that this is not the case. M&A success is mainly determined by industry-specific size effects and common agency conflicts.