Volume 29, Number 1, 2007 of the Journal of Real Estate Research
The Valuation
Impact of Financial Advisors: An Empirical Analysis of REIT Mergers and
Acquisitions
Kenneth Daniels
Virginia Commonwealth University
Richmond, Virginia 23284-4000
E-mail:
kndaniel@vcu.edu
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Richard A. Phillips
Virginia Commonwealth University
Richmond, Virginia 23284-4000
Email: raphilli@vcu.edu |
Abstract: 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.
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