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

18 Pages Posted: 9 Mar 2006

See all articles by Kenneth N. Daniels

Kenneth N. Daniels

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

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

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

Kenneth N. Daniels

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

Richmond, VA 23284
United States

Richard A. Phillips (Contact Author)

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

Richmond, VA 23284
United States
804-828-7188 (Phone)
804-828-8884 (Fax)

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