Citation

Discussion Paper Details

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

Author(s): Zoran Filipovic and Alexander F Wagner

Publication Date: March 2019

Keyword(s): Corporate announcements, intangible assets, intangibles talk, mergers and acquisitions, Takeovers and textual analysis

Programme Area(s): Financial Economics

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.

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Bibliographic Reference

Filipovic, Z and Wagner, A. 2019. 'The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13560