The Valuation Impact of Financial Advisors: An Empirical Analysis of REIT Mergers and Acquisitions
This paper analyzes the effect of financial advisor-monitors on the valuation of real estate investment trust (REIT) mergers. Advisor choice determinants and the effect of advisors on transaction value are examined using a sample of REIT mergers for the 1981 to 2001 period. A two-stage target firm pricing model is estimated: the first stage (logit) estimates the probability of advisor use and the second stage analyzes the effect of advisors on target firm valuation. The results indicate that financial advisor monitoring, possibly by reducing information asymmetries, has significant positive effects on the value of REIT acquisitions.
Volume (Year): 29 (2007)
Issue (Month): 1 ()
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- Linda Allen & Julapa Jagtiani & Stavros Peristiani & Anthony Saunders, 2002. "The role of bank advisors in mergers and acquisitions," Staff Reports 143, Federal Reserve Bank of New York.
- Kale, Jayant R. & Kini, Omesh & Ryan, Harley E., 2003. "Financial Advisors and Shareholder Wealth Gains in Corporate Takeovers," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(03), pages 475-501, September.
- Elayan, Fayez A & Young, Philip J, 1994. "The Value of Control: Evidence from Full and Partial Acquisitions in the Real Estate Industry," The Journal of Real Estate Finance and Economics, Springer, vol. 8(2), pages 167-182, March.
- DeLong, Gayle L., 2001. "Stockholder gains from focusing versus diversifying bank mergers," Journal of Financial Economics, Elsevier, vol. 59(2), pages 221-252, February.
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