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 p...

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Bibliographic Details
Published in:The Journal of real estate research 2007-01, Vol.29 (1), p.57-74
Main Authors: Daniels, Kenneth, Phillips, Richard A.
Format: Article
Language:English
Subjects:
Acquisitions
Acquisitions & mergers
Advisors
Analytical estimating
Coefficients
Corporate mergers
Costs
Divestiture
Efficiency
Empirical tests
Financial analysis
Financial planners
Financial services
Financial transactions
Information asymmetry
Investment banking
Investment trusts
Investments
Market shares
Mergers
Mills ratio
Modeling
Real estate investment trusts
Real estate market
REITs
Studies
Valuation
Variables
Wealth effect
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Summary: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.
ISSN:0896-5803
2691-1175
DOI:10.1080/10835547.2007.12091189