Glamour versus value, market timing and firm performance: evidence from mergers and acquisitions
Kai-Shi Chuang ()
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Kai-Shi Chuang: Tunghai University
Review of Quantitative Finance and Accounting, 2018, vol. 51, issue 4, 967-1003
Abstract This study examines the performance of glamour versus value firms in M&As. Specifically, the current study takes into account the market timing to explore the performance of glamour versus value firms in M&As. Using the standard event study methodology with 1109 targets and 6980 bidders during the 2000–2013 period, the results show that glamour (value) firms are more likely to choose the hot (cold) market condition to engage in M&As for both targets and bidders. The evidence also reveals that the performance of glamour versus value firms is less sensitive to the market timing for targets. While glamour bidding firms obtain lower announcement returns, the losses are even more significant during long run post-announcement period. A further analysis indicates that bidders in general experience negative announcement returns in the hot market irrespective of glamour versus value firms. While glamour bidding firms obtain lower post-announcement returns in the hot market relative to their value counterparts, glamour bidders generate higher post-announcement returns during the cold market than value bidders. The regression analysis finds consistent results for bidders. Overall, this study sheds lights on the importance of the market timing on the performance of glamour versus value firms in M&As.
Keywords: Glamour versus value firms; Market timing; Announcement returns; Mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
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