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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 Wagner

    (CEPR - Center for Economic Policy Research)

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 crosssection 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 Wagner, 2023. "The intangibles song in takeover announcements: Good tempo, hollow tune," Post-Print hal-04579927, HAL.
    • Handle: RePEc:hal:journl:hal-04579927
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    Cited by:

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    2. Masulis, Ronald W. & Reza, Syed Walid & Guo, Rong, 2023. "The sources of value creation in acquisitions of intangible assets," Journal of Banking & Finance, Elsevier, vol. 154(C).

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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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