Wealth effects of corporate real estate disposals : impact of the Asian financial crisis

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 extends the literature on corporate real estate disposal by concluding that price reactions is conditional on economic conditions at the time of announcements on property disposals.