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Impact of Asian Financial Crisis on Malaysian Corporate Real Estate Disposals

Author/s: Ting Kien Hwa, Annuar M D Nassir, Graeme Newell, Taufiq Hassan

Date Published: 1/01/2006

Published in: Volume 12 - 2006 Issue 1 (pages 55 - 84)

Abstract

This study examines 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. The results show 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. Cross-sectional regressions show that the Asian financial crisis and the relative size of the disposal are significant factors affecting the abnormal returns. The findings extend the literature on corporate real estate disposal by concluding that price reactions are conditional on economic conditions at the time of announcements on property disposals.

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Keywords

Corporate Real Estate - Disposals - Event Study - Wealth Effects

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