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

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

Zoran M. Filipovic, Alexander Wagner

Series number :

Serial Number: 
599/2019

Date posted :

March 13 2019

Last revised :

September 09 2021
SSRN Share

Keywords

  • Corporate announcements • 
  • intangible assets • 
  • intangibles talk • 
  • mergers and acquisitions • 
  • takeovers • 
  • Textual Analysis

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.

Authors

Real name:
Zoran M. Filipovic