Acquisitions by Real Estate Investment Trusts as a strategy for minimization of investor tax liability
A key requirement for Real Estate Investment Trusts (REITs) to maintain their corporate tax-exempt status is that 95 percent of income must be distributed as dividents. Receipt of this income imposes a personal tax burden on shareholders. A central tenet of this research is that REIT management is motivated to reduce investors’ personal taxes. This may involve reduction of before-tax income through acquisitions. Market reaction to REIT merger announcements is found to be positive and significant. The evidence developed is more consistent with abnormal returns being related to a tax advantage from acquisitions rather than gaining economies of scale. Copyright Springer 2001
Year of publication: |
2001
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Authors: | Li, Jingyu ; Elayan, Fayez ; Meyer, Thomas |
Published in: |
Journal of Economics and Finance. - Springer, ISSN 1055-0925. - Vol. 25.2001, 1, p. 115-134
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Publisher: |
Springer |
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