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Do REIT Announcements of Open Market Repurchase Programs Signal Value Changes in Rivals?

Author

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  • Dean Diavatopoulos
  • Andy Fodor
  • Shawn Howton
  • Shelly Howton

Abstract

Executive Summary. This paper examines the short- and long-run equity returns for REITs that do not announce open market repurchases when a rival real estate investment trust (REIT) announces a repurchase. Prior research finds evidence of significant positive returns to the announcing REITs, on average, but does not examine the effect of the announcement on rival REITs. We find evidence of a significant negative reaction for nonannouncing rival REITs over the event window. The returns are directly related to the previous four week return for non-announcing REITs and inversely related to the firm's market-to-book ratio and volatility of returns. Both the announcing firms and their non-announcing rivals significantly outperform the broader equity market on a risk-adjusted basis in the two years following the repurchase announcement.

Suggested Citation

  • Dean Diavatopoulos & Andy Fodor & Shawn Howton & Shelly Howton, 2010. "Do REIT Announcements of Open Market Repurchase Programs Signal Value Changes in Rivals?," Journal of Real Estate Portfolio Management, Taylor & Francis Journals, vol. 16(2), pages 131-140, January.
  • Handle: RePEc:taf:repmxx:v:16:y:2010:i:2:p:131-140
    DOI: 10.1080/10835547.2010.12089872
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