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

Author

Listed:
  • Zoran Filipovic

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Alexander F. Wagner

    (Swiss Finance Institute [Geneva] - 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," Post-Print hal-04079915, HAL.
    • Handle: RePEc:hal:journl:hal-04079915
    Note: View the original document on HAL open archive server: https://hal.science/hal-04079915
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    References listed on IDEAS

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