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The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune

Author

Listed:
  • Zoran Filipovic

    (Swiss Finance Institute; USI Lugano)

  • Alexander F. Wagner

    (University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute)

Abstract

Mergers and acquisitions are often motivated by the intention of creating value from intangible assets. We develop a novel word list of intangibles and apply it to takeover announcements. Deals presented with more “intangibles talk” complete more quickly. However, the value of these deals to the acquirer is questionable: One standard deviation more in intangibles talk results in 0.45 percentage points lower abnormal announcement returns of bidders. Agency problems explain little of these results. Instead, payment mode choices and insider trades suggest that intangibles talk reflects managerial overoptimism. Overall, takeover announcements can provide important information regarding the quality of deals.

Suggested Citation

  • Zoran Filipovic & Alexander F. Wagner, 2019. "The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune," Swiss Finance Institute Research Paper Series 19-03, Swiss Finance Institute, revised Mar 2019.
    • Handle: RePEc:chf:rpseri:rp1903
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3330623
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    Citations

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    Cited by:

    1. Andrei Filip & Gerald J. Lobo & Luc Paugam & Hervé Stolowy, 2022. "Disclosures About Key Value Drivers in M&A Announcement Press Releases: An Exploratory Study," Abacus, Accounting Foundation, University of Sydney, vol. 58(1), pages 62-104, March.
    2. Masulis, Ronald W. & Reza, Syed Walid & Guo, Rong, 2023. "The sources of value creation in acquisitions of intangible assets," Journal of Banking & Finance, Elsevier, vol. 154(C).

    More about this item

    Keywords

    Corporate announcements; intangible assets; intangibles talk; mergers and acquisitions; takeovers; textual analysis;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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