5 Conclusion
This study explores the performance of glamour versus value frms in M&As. Specifcally, the current study takes into account the market timing to look into what determinants can infuence glamour versus value frms and whether glamour versus value frms are more likely to choose diferent market conditions to engage in M&As. In addition, this study accounts for the market timing to examine the performance of glamour versus value frms in M&As. Using the standard event study methodology with 1109 targets and 6980 bidders from the period of 2000–2013, the results show that frm specifc characteristics in terms of ROA, leverage and frm size can be determinants to infuence glamour versus value frms for targets and bidders. In addition, cash payment appears to be a determinant to infuence glamour versus value bidding frms.
Additionally, the evidence reveals that glamour targets are more (less) likely to engage in M&As during the hot (cold) market condition. Instead, value targets are more likely to involve in M&As during the cold market condition. Interestingly, when the market is hot, glamour (value) bidding frms are more (less) likely to engage in M&As. In contrast, when the market is under cold condition, glamour (value) bidding frms are less (more) likely to involve in M&As.
With respective to the performance of glamour versus value frms, the results reveal that there is no signifcant diference in target announcement returns for glamour versus value frms. Given the hot market, glamour targets obtain higher announcement returns than value targets. However, the results are reverse during the cold market, showing that value targets earn higher announcement returns relative to their glamour counterparts. However, the regression analysis indicates that the relationship between target announcement returns and glamour versus value frms is less sensitive to the market condition.
