Impact of the Asian financial crisis on corporate real estate disposals

Impact of the Asian financial crisis on corporate real estate disposals Purpose – To examine the stock price reactions to the announcements of corporate real estate disposals by listed non‐property companies in Malaysia and whether disposals under different economic conditions lead to different price reactions. Design/methodology/approach – This research applies the event study approach. Findings – It is found that the cumulative abnormal returns associated with the property disposals differ significantly in different economic conditions. Price reaction for property disposals before the Asian financial crisis is consistent with the normal investor expectations of increasing shareholder value. However, property disposals during and after the crisis have negative wealth effects. Research limitations/implications – The research is limited in that it has considered only the Asia financial crisis. Further research might explore the impact of other forms of economic conditions on wealth effects of corporate real estate disposals. Practical implications – The research clearly identified the need to consider economic condition as a factor affecting wealth effects of property disposals. The findings of this study are useful to decision makers of multinational companies which have significant corporate real estate investments in China, India and developing countries. Originality/value – The paper argues that the wealth effect of corporate real estate disposals is affected by economic condition. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Real Estate Emerald Publishing

Impact of the Asian financial crisis on corporate real estate disposals

Journal of Corporate Real Estate, Volume 8 (1): 11 – Jan 1, 2006

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Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
1463-001X
DOI
10.1108/14630010610664787
Publisher site
See Article on Publisher Site

Abstract

Purpose – To examine the stock price reactions to the announcements of corporate real estate disposals by listed non‐property companies in Malaysia and whether disposals under different economic conditions lead to different price reactions. Design/methodology/approach – This research applies the event study approach. Findings – It is found that the cumulative abnormal returns associated with the property disposals differ significantly in different economic conditions. Price reaction for property disposals before the Asian financial crisis is consistent with the normal investor expectations of increasing shareholder value. However, property disposals during and after the crisis have negative wealth effects. Research limitations/implications – The research is limited in that it has considered only the Asia financial crisis. Further research might explore the impact of other forms of economic conditions on wealth effects of corporate real estate disposals. Practical implications – The research clearly identified the need to consider economic condition as a factor affecting wealth effects of property disposals. The findings of this study are useful to decision makers of multinational companies which have significant corporate real estate investments in China, India and developing countries. Originality/value – The paper argues that the wealth effect of corporate real estate disposals is affected by economic condition.

Journal

Journal of Corporate Real EstateEmerald Publishing

Published: Jan 1, 2006

Keywords: Real estate; Transaction costs; Asia; Financial risk

References

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