Can rainmakers justify their pay? The role of investment banks in REIT M&As


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.

Keyword : Real Estate Investment Trust (REIT), mergers and acquisitions, financial advisor, investment bank, event study

How to Cite
Zhang, W., Sun, T., Goh, P. H. L., Wang, Z., & Mansley, N. (2021). Can rainmakers justify their pay? The role of investment banks in REIT M&As. International Journal of Strategic Property Management, 25(4), 254-266.
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May 20, 2021
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