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

67 Pages Posted: 7 Mar 2019

See all articles by Zoran Filipovic

Zoran Filipovic

Université Paris-Dauphine, PSL Research University

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

Date Written: March 2019

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.

Keywords: Corporate announcements, intangible assets, intangibles talk, mergers and acquisitions, Takeovers, textual analysis

JEL Classification: G14, G34

Suggested Citation

Filipovic, Zoran and Wagner, Alexander F., The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune (March 2019). CEPR Discussion Paper No. DP13560, Available at SSRN: https://ssrn.com/abstract=3346351

Zoran Filipovic (Contact Author)

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Lattre de Tassigny
Paris, 75016
France

Alexander F. Wagner

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Zürich, 8032
Switzerland
+41 44 634 3963 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Swiss Finance Institute ( email )

Switzerland

HOME PAGE: http://www.alex-wagner.com

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