Takeover, intangibility and value creation: an event study

Abstract

Recent researches suggest that one of the main motivations for mergers and acquisitions is the attempt of the acquirers in incorporating intangible assets of the target firm. This is because such assets provide important sources of sustainable competitive advantage and growth opportunities. This paper examines the relationship between the intangibility and value creation in the acquisition events of Brazilian firms. The method applied in this article is the event study, which tests the influence of the announcement of acquisitions on the acquirer's cumulative abnormal returns. We analyzed two sub-samples. One of them is composed by events involving intangible-intensive firms. The other one is composed by events involving tangible-intensive firms. The results of the analysis of variance show significant differences between the returns of those two samples, always indicating positive returns for the intangible-intensive firms and negative returns for the tangible-intensive ones.