HEC-Ecole de gestion de l'Université de Liège
HEC-Ecole de gestion de l'Université de Liège

What are the reasons behind American reits mergers and acquisitions and what are the consequences of the announcement on the stock price of the acquiring firms ?

Wintgens, Thomas ULiège
Promotor(s) : Hübner, Georges ULiège
Date of defense : 2-Sep-2020/8-Sep-2020 • Permalink :
Title : What are the reasons behind American reits mergers and acquisitions and what are the consequences of the announcement on the stock price of the acquiring firms ?
Author : Wintgens, Thomas ULiège
Date of defense  : 2-Sep-2020/8-Sep-2020
Advisor(s) : Hübner, Georges ULiège
Committee's member(s) : Doumbia, Souleymane ULiège
Ledent, Maxime 
Language : English
Number of pages : 54
Keywords : [fr] Real Estate Investment Trusts
[fr] REITs
[fr] Equity
[fr] Mergers
[fr] Announcement
[fr] Market Model
[fr] Event Study
[fr] Post-merger performance
[fr] BHARs
[fr] Buy-and-hold abnormal returns
[fr] Winsor
[fr] Fama & French
Discipline(s) : Business & economic sciences > Finance
Institution(s) : Université de Liège, Liège, Belgique
Degree: Master en sciences de gestion, à finalité spécialisée en Banking and Asset Management
Faculty: Master thesis of the HEC-Ecole de gestion de l'Université de Liège


[en] Unlike operating companies, acquisitions between Real Estate Investment Trusts (REITs) are friendly and acquirers have been previously found to experience higher than average abnormal returns. This study examines the short- and long-term post-merger performance of American Equity Real Estate Investment Trusts through three different methods: a market model, the Buy-and-Hold Abnormal Returns and the Fama & French Five-Factor model. A subdivision was made to analyze the difference between the public and private acquisitions. We found out that public acquisitions yield better results than private ones. Several reasons have been explored to explain such results. One of them is that the REIT industry comprises a large private market and public companies might have a tendency to overreact if a private opponent extends faster than its peers. We further find that mandatory dividend distribution reduces information asymmetry and in the same way hubris and agency issues that might arise from divergent opinion between managers and shareholders. This is mainly to due to a lower level of cash available for managers of such companies. On the same basis, we further find that due to due to specific legislation, acquisitions are mainly horizontal in the REITs industry, which also reduces information asymmetries and in the same direction agency costs. In contrast, we find that the non-presence of blockholders in this particular industry diminishes the efficiency of the management and consequently has a negative impact on the returns.



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  • Wintgens, Thomas ULiège Université de Liège > Master sc. gest., à fin.


Committee's member(s)

  • Doumbia, Souleymane ULiège Université de Liège - ULiège > HEC Liège : UER > UER Finance et Droit : Finance de Marché
    ORBi View his publications on ORBi
  • Ledent, Maxime
  • Total number of views 101
  • Total number of downloads 399

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