The impact of merger and acquisition announcements on prices of Canadian real estate sector

Abstract

The purpose of this paper is to examine whether or not the Merger and Acquisition (M&A) announcements affect the stock prices of Canadian real estate sector and if investors can obtain abnormal return based on these M&A announcements. A sample of 39 M&A announcements released by 25 publicly traded real estate firms during 2011 and 2012 are selected in the sample. By applying the market model, Average Abnormal Return Model (AAR) and Average Cumulative Abnormal Return Model (ACAR), the outputs show that the Canadian real estate sector is efficient in semi-strong form and investors cannot obtain abnormal returns from the M&A announcements released by these firms. Also, the M&A activities have no impact on Canadian real estate firms based on the selected sample.