Exchange options in the REIT industry

Marcato, G. ORCID: https://orcid.org/0000-0002-6266-4676, Sebehela, T. and Campani, C. H. (2019) Exchange options in the REIT industry. Advances in Investment Analysis and Portfolio Management, 9. pp. 217-252. ISSN 1556-5068 doi: 10.6291/AIAPM.201912_9.0008

Abstract/Summary

This article models mergers as exchange options where acquirers offer stocks and/or cash to target firms in exchange of acquiring some shareholding in target firms. Mergers analysed in this article happen between homogeneous entities. The Black and Scholes (B–S) and Margrabe models are used to price cash and stocks (including stocks and cash) deals respectively. The merger and acquisition (M&A) traits are grouped as conflict of interest, market growth, funding and specialization. Regression results illustrate that exchange options react to M&A characteristics differently. Thus, the results are beneficial to both sell-and buy-side investors in terms of how one manages merging firms. The goodness of fit suggests that strategic acquisitions played important roles.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/87569
Item Type	Article
Refereed	Yes
Divisions	Henley Business School > Real Estate and Planning Henley Business School > Finance and Accounting
Publisher	Ainosco Press
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