Reversing the trend of the prior several quarters, Lazard Ltd. LAZ reported a negative surprise of 27.5% in the first-quarter 2016 which led to a decline in share price of 2.05%. The company reported adjusted earnings of 50 cents per share, missing the Zacks Consensus Estimate of 69 cents by a wide margin. Also, the reported figure compared unfavorably with 77 cents earned in the prior-year quarter.Results were impacted by deteriorating top-line performance on the back of lower M&A (mergers and acquisitions) advisory activity. Both the financial advisory and asset management segments exhibited a fall in revenues. Moreover, lower assets under management (AUM) was a major drag. Operating expenses declined and to a lesser extent offset the downside.Adjusted net income in the quarter came in at $67 million, down 35% year over year. On a GAAP basis, Lazard’s net income came in at $67 million or 50 cents per share, compared with $56 million or 42 cents in the prior-year quarter. Performance in DetailIn the first quarter, adjusted operating revenues came in at $506 million, down 13% year over year. The decline was mainly attributable to a decrease in financial advisory revenues as well as asset management revenues. Moreover, revenues missed the Zacks Consensus Estimate of $598 million.Adjusted operating expenses were around $399.8 million in the quarter, down 21% year over year. Lower compensation and benefits expenses as well as non-compensation expenses led to the improvement.Adjusted compensation and benefits expense decreased 8% on a year-over-year basis to $298 million. Adjusted non-compensation expense for the quarter was $102 million, down 5% year over year.The ratio of compensation expense to operating revenue was 58.9% compared with 55.6% in the prior-year quarter. The ratio of non-compensation expense to operating revenue was 20.1% compared with 18.3% in the prior-year quarter.The company affirmed its annual targets of an adjusted non-compensation expense-to-revenue ratio between 16% and 20%, while the compensation-to-operating revenue ratio target is in the mid-to high 50 percentage range.Segment PerformanceFinancial Advisory: The segment’s total revenue was $266 million, down 12% from the prior-year quarter. The fall was primarily due to decline in revenues from strategic advisory, partially offset by higher restructuring revenues.Asset Management: The segment’s total revenue was $240 million, down 12% from the prior-year quarter. Lower management, incentive and other fees led to the deterioration.Corporate: The segment generated total revenue of $0.5 million, down significantly from $8.3 million recorded in the prior-year quarter.Assets Under ManagementAs of Mar 31, 2016, AUM was recorded at $191 billion, down 4% year over year. The company recorded net outflows of $361 million. Also, the quarter experienced market and foreign exchange appreciation of $4.5 billion.Average AUM came in at $185 billion, down 7% year over year.Balance SheetLazard’s cash and cash equivalents stood at $701 million as of Mar 31, 2016, compared with $1.13 billion as of Dec 31, 2015. The company’s stockholders’ equity was $1.17 billion compared with $1.31 billion as of Dec 31, 2015.Capital DeploymentDuring first-quarter 2016, Lazard returned $328 million to shareholders. This included dividend payment of $194 million, share repurchase of $83 million and $51 million paid for meeting employee tax obligations in exchange of share issuances upon vesting of equity grants.Our ViewpointResults reflect a disappointing quarter for Lazard. Though the company’s diverse footprint, steady capital deployment activities and cost containment initiatives position it favorably for the long run, macro headwinds and stringent regulations put the company’s financials under pressure.Currently, Lazard carries a Zacks Rank #4 (Sell).Among other investment managers, T. Rowe Price Group, Inc. TROW, Franklin Resources, Inc. BEN and Legg Mason Inc. LM are scheduled to release March quarter-end earnings results on Apr 26, Apr 27 and Apr 29, respectively.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report T ROWE PRICE (TROW): Free Stock Analysis Report LEGG MASON INC (LM): Free Stock Analysis Report FRANKLIN RESOUR (BEN): Free Stock Analysis Report LAZARD LTD (LAZ): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research