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Real estate finance institutions as well as the mortgage banking landscape have undergone a profound restructuring since the late 1980s. This study seeks to examine the value implications of 69 domestic and cross‐border merger and acquisition (M&A) deals of exchange‐listed real estate finance institutions.

To identify relevant M&A transactions between 1995 and 2002 the following data sources are used: Thomson Financial SDC (Securities Data Company – Mergers and Acquisitions Database), Bloomberg, and Computasoft M&A Data. To assess the value implications of M&A standard event study methodology is used, which relies on the market adjusted model and the market model. Cumulated abnormal returns stemming from the market model and the market adjusted model are calculated for four different event windows.

The results document that shareholders of targets earn, at least in the closest analyzed interval, significant positive abnormal returns. There are no significant abnormal returns accruing to the shareholders of the bidders in any of the analyzed intervals. CARs are slightly negative in two of the four event windows, and positive in the remaining two. Hence, M&A transactions cannot be considered a clear success. Nor, however, is any significant evidence found that they destroy value.

Since market valuations of mergers and acquisitions depend on industry‐specific circumstances, this paper explores value effects for a specific sector, namely the real estate finance sector. It shows that real estate finance transactions are beneficial for target shareholders. In addition, the results indicate that these transactions do not significantly destroy value for bidding companies. This result contradicts prior evidence for the related banking industry.

The purpose of this paper is to examine investor reactions to auditor opinions containing qualifications or an emphasis of matter paragraph related to going concern uncertainty or financial distress. In particular, abnormal returns are analyzed around audit report dates.

The event study methodology, focusing on a short event window, was used to determine whether there is an immediate market reaction to the audit report announcement, as might be expected assuming efficient stock markets.

Overall, this analysis shows that the audit reports investigated have information content for investment decisions. In particular, the qualifications expressed in the audit report have a negative effect on stock prices. It is also shown that an unqualified opinion with an emphasis of matter paragraph regarding going concern uncertainty or financial distress has a positive effect on stock prices. These results also elucidate the distinction between different types of opinions in the Italian context.

This paper has attempted to limit the possible concurrent effects on stock prices using a short window event study methodology. However, the possibility that some other event may have occurred during this event window cannot be excluded. Among the policy implications coming from this research, it is argued that the authorities should regulate the public disclosure of audit reports, so that the information becomes available to the audited company and the other stakeholders on the same day, which, in theory, would be the day that the audit process concludes with the signing of the audit report.

The findings of this paper show the relevance of audit reports, distinguishing the different impacts based on the types of audit opinions issued in a specific jurisdiction (qualified and unqualified with an emphasis of matter paragraph).