Essays on the Value and Transferability of Intangible Assets

• Author / Creator

  Veeren, Parianen

• In the first essay, I investigate whether bidders pay for acquired targets’ organization capital (OC), defined as the processes and systems that firms use to efficiently mix their capital and labor, in merger and acquisition (M&A) transactions. I also investigate whether the acquired OC is transferable and productive. I use a sample of completed U.S. M&A deals from 1990 to 2013. First, depending on the measure of recorded intangible assets employed, I find that bidders pay between 9 and 25 cents for one dollar of target OC. Second, I find that acquired OC is positively related to post-acquisition bidders’ return on assets, sales growth, and asset turnover in same-industry transactions. The returns on acquired OC in the first and second fiscal years after transaction completion are 15% and 12%, respectively. These findings support the idea that OC is a valuable asset that is transferable between firms.
  In the second essay, I examine whether organization capital is transferable across different industries. Using a sample of Compustat segment data from 1976 to 2014, I find results consistent with diversified firms benefitting more from their organization capital than do non-diversified firms when studying the relation between organization capital and each of return on assets, sales growth and asset turnover ratio. These findings support the transferability of organization capital across industries and thus suggest that investments in OC can transcend the industries in which they are made.
  In the third essay, I investigate whether acquired targets’ corporate social responsibility (CSR) is a transferable asset in merger and acquisition transactions. Using a sample of U.S. M&A deals from 1991 to 2013, I find a negative relation in same-industry deals between the acquired targets’ CSR index and both scaled intangible assets booked by the bidders and bidders’ post-acquisition return on assets. These relations imply that acquired targets’ CSR acts more like a liability than an asset as it reduces the value of intangible assets recorded in M&A deals.

• Subjects / Keywords

  • organization capital
  • intangible assets
  • corporate social responsibility

• Graduation date

  Fall 2019

• Type of Item

  Thesis

• Degree

  Doctor of Philosophy

• DOI

  https://doi.org/10.7939/r3-a953-v583

• License

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