Corporate real estate's impact on the takeover market

Research output: Contribution to journalArticle

20 Scopus citations

Abstract

This article explores the issues and problems associated with corporate real estate ownership as viewed through the takeover market. The perception held by managers is that corporate real estate assets are unique, specialized assets. This perception conflicts with financial theory which states that the market values all corporate assets based only on their expected future cash flows. Thus corporate real estate assets are priced according to their cash flows and are like other corporate assets. This study tests the hypothesis that corporate real estate is a specialized asset by examining the impact real estate assets have on the takeover market. The study uses a logit regression model in order to attempt to predict which firms become takeover targets. If corporate real estate in general is a specialized asset, then real estate is expected to be an important variable in predicting takeover targets. Although the logit model has little predictive accuracy, results from the prediction model suggest that corporate real estate plays a significant part in determining the likelihood of a firm's becoming a takeover target. The greater the real estate holdings, the greater the likelihood of a firm's becoming a takeover target.

Original languageEnglish (US)
Pages (from-to)307-322
Number of pages16
JournalThe Journal of Real Estate Finance and Economics
Volume3
Issue number4
DOIs
StatePublished - Dec 1 1990

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics
  • Urban Studies

Fingerprint Dive into the research topics of 'Corporate real estate's impact on the takeover market'. Together they form a unique fingerprint.

  • Cite this