Download This PaperThe Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune
Swiss Finance Institute Research Paper No. 19-03
European Corporate Governance Institute (ECGI) - Finance Working Paper No. 599/2019
Forthcoming, Review of Financial Studies
90 Pages Posted: 8 Feb 2019 Last revised: 22 May 2023
Date Written: June 30, 2024
Abstract
Mergers and acquisitions are often motivated by the intention of creating value from intangible assets. We develop a word list of intangibles and apply it to takeover announcements. One standard deviation more in intangible-related language (“intangibles talk”) lowers announcement returns for the acquirer by 0.50 percentage points, and predicts worse operating performance. Bidder managers appear to believe in the deals nonetheless, as evidenced by insider trades, payment choices, and completion probabilities and speed. Overall, takeover announcement texts reveal important information regarding hard-to-measure aspects of deal quality.
Keywords: Corporate announcements, intangible assets, intangibles talk, mergers and acquisitions, takeovers, textual analysis
JEL Classification: G14, G34, G41
Suggested Citation: Suggested Citation
Filipovic, Zoran M. and Wagner, Alexander F., The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune (June 30, 2024). Swiss Finance Institute Research Paper No. 19-03, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 599/2019, Forthcoming, Review of Financial Studies, Available at SSRN: https://ssrn.com/abstract=3330623 or http://dx.doi.org/10.2139/ssrn.3330623
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