Delistings in the Global Property Share Market

The literature regarding mergers and acquisitions suggests various motives for delisting: improving managerial efficiency, undervalued shares, size effect, agency costs, and, most importantly, taking on extra debt to reduce cost of capital and decrease agency problems. These arguments could also apply to property companies, but the extent to which this is the case will probably differ across countries, since different countries have strongly varying institutional regimes regarding publicly listed property companies. For example, the debt argument does not hold for countries having a REIT structure, because these are tax-exempt. This leads to our main research question: what are the elementary drivers of delistings in international property markets? Between January 2000 and December 2004, more than 200 property company delistings took place globally, and of these, enough information for in-depth analysis is available for 175 executed delistings. Based on this sample, we will compare targets and acquirers with respect to a wide range of factors that might potentially influence delistings and subsequently build a logit model to determine takeover probability. We expect a negative relationship between the takeover probability and size, stock performance and liquidity.