Market reaction to the announcement of successful land tender biddings : evidence from 2003 to 2010

Abstract

This dissertation adopts the event study methodology in examining the market reaction of the stock prices of the winning tenderer upon the announcement of the tender win. The companies studied by the dissertation are those listed in the Singapore Stock Exchange (SGX) during the period between 2003 and 2010. From this study, it was found that land tender win announcements do result in positive abnormal return on the winning companies’ stock prices. The underlying factors which are responsible for the positive abnormal return as found in this paper are the level of experience of the winning tenderer, the level of uncertainty of the development, the number of bidders participated in the bidding and the type of land zoning for the site, in which commercial and white sites enjoys higher abnormal return than other types of land use. On the other hand, negative relationship is observed between the bid margin and the abnormal return. The higher the margin the lower the return will be. The sales agency responsible for the sale is also another factor that is responsible for the existence of abnormal return, in which sites sold by URA have higher abnormal return than those sold by the HDB. Overall, this study managed to reaffirm the findings of Ooi and Sirmans (2004) that significant positive abnormal return exists for the winning companies that is successful in acquiring land from the Singapore’s Government Land sale Programme.