Open AccessCAN RAINMAKERS JUSTIFY THEIR PAY? THE ROLE OF INVESTMENT BANKS IN REIT M&AS
Author(s) -
Weiwei Zhang,
Tiezhu Sun,
Patrick Han Lin Goh,
Zilong Wang,
Nick Mansley
Publication year - 2021
Publication title -
international journal of strategic property management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.43
H-Index - 30
eISSN - 1648-9179
pISSN - 1648-715X
DOI - 10.3846/ijspm.2021.14883
Subject(s) - real estate investment trust , business , investment (military) , monetary economics , shareholder , unit investment trust , value (mathematics) , abnormal return , finance , shareholder value , return on investment , financial system , economics , open ended investment company , production (economics) , real estate , microeconomics , corporate governance , machine learning , politics , political science , computer science , stock exchange , law
This 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.