The Valuation Impact of Financial Advisors: An Empirical Analysis of Reit Merger and Acquisitions

Daniels, Kenneth N.; Phillips, Richard

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The Valuation Impact of Financial Advisors: An Empirical Analysis of Reit Merger and Acquisitions

Journal of Real Estate Research (JRER), Vol. 29, No. 1 , 2007

18 Pages Posted: 9 Mar 2006

See all articles by Kenneth N. Daniels

Kenneth N. Daniels

Daniels Foundation for Impact Investments and Development

Richard Phillips

Virginia Commonwealth University (VCU) - Department of Finance, Insurance & Real Estate

Abstract

This paper analyzes the effect of financial advisor-monitors on the valuation of REIT mergers. We analyze advisor choice determinants and the effects of advisors on transaction value using a sample of REIT mergers for the 1981 to 2001 period. We estimate a two stage target firm pricing model: the first stage (logit) estimates the probability of the 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.

Keywords: REIT, mergers and acquisitions, transaction value

JEL Classification: G34, L85

Suggested Citation: Suggested Citation

Daniels, Kenneth N. and Phillips, Richard A., The Valuation Impact of Financial Advisors: An Empirical Analysis of Reit Merger and Acquisitions. Journal of Real Estate Research (JRER), Vol. 29, No. 1 , 2007, Available at SSRN: https://ssrn.com/abstract=887407