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Can rainmakers justify their pay? The role of investment banks in reit m&as

Published version
Peer-reviewed

Type

Article

Change log

Authors

Zhang, W 
Sun, T 
Goh, PHL 
Wang, Z 
Mansley, N 

Abstract

jats:pThis study explicitly rejects the prima facie proposition that the top-tier investment banks are capable of delivering supernormal value creation to the shareholders of a REIT acquirer in a corporate acquisition. Using the event study method, we find that REIT acquirers advised by market-leading investment banks suffer an average cumulative abnormal return of −4.41% following the M&A announcement, whereas REIT acquirers advised by non-top-tier investment banks only suffer an average cumulative abnormal return of −1.49%. The evidence shows that the contemporary practice of employing investment banks based on the prestige of the advisory firms could potentially result in value-destroying M&As for the REIT acquirers.</jats:p>

Description

Keywords

3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour

Journal Title

International Journal of Strategic Property Management

Conference Name

Journal ISSN

1648-715X
1648-9179

Volume Title

25

Publisher

Vilnius Gediminas Technical University