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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

    (CEPR - Center for Economic Policy Research - CEPR, Swiss Finance Institute, UZH - Universität Zürich [Zürich] = University of Zurich)

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. The value of these deals to the acquirer, as shown by abnormal announcement returns, is questionable: One standard deviation more in intangibles talk lowers returns by 0.50 percentage points. Agency problems explain little of these results. Rather, the cross-section of announcement returns, payment mode choices, and insider trades suggest that intangibles talk reflects managerial overoptimism. In sum, takeover announcements reveal important information regarding the quality of deals.

Suggested Citation

  • Zoran Filipovic & Alexander F. Wagner, 2023. "The Intangibles Song in Takeover Announcements : Good Tempo, Hollow Tune," Working Papers hal-04056373, HAL.
    • Handle: RePEc:hal:wpaper:hal-04056373
    as

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