Value Creation and Governance Structure in REIT Mergers
The Umbrella Partnership REIT (UPREIT) structure has become the dominant form of organization for U.S. REITs. We examine the utility of this corporate structure from a new perspective, finding evidence that convertible securites issued by UPREITs in payment for properties acquired from private sellers often function as instruments of corporate control, aligning the interests of new executives acquired in the transaction with those of the purchasing REITs shareholders. We also find evidence that these financial arrangements are used to signal information regarding the firm's future prospects. We use a sample of 53 public-private mergers 1995-2001, in which the acquirer is a publicly traded REIT. We find that wealth effects from central managerial changes are positively related to the degree to which payment takes the form of convertible equity units of UPREIT subsidiaries, and to the minimum lock-up period for those units prior to conversion. The positive effects of longer lock-ups are evidence that financing structure can be used to reduce agency and information costs related to managerial restructuring in public-private mergers
Year of publication: |
[2005]
|
---|---|
Authors: | Campbell, Robert D. |
Other Persons: | Ghosh, Chinmoy (contributor) ; Sirmans, C. F. (contributor) |
Publisher: |
[2005]: [S.l.] : SSRN |
Description of contents: | Abstract [papers.ssrn.com] |
Saved in:
Saved in favorites
Similar items by person
-
Corporate Governance and Performance in the Market for Corporate Control : The Case of REITs
Campbell, Robert D., (2011)
-
Campbell, Robert D., (2001)
-
Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs
Campbell, Robert D., (2011)
- More ...