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

86 Pages Posted: 7 Mar 2019 Last revised: 22 Sep 2021

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. 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.

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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