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Conference Paper: The Invisible Burden: Goodwill and the Cross-Section of Stock Returns
| Title | The Invisible Burden: Goodwill and the Cross-Section of Stock Returns |
|---|---|
| Authors | |
| Issue Date | 2019 |
| Publisher | Financial Management Association International. |
| Citation | 2019 Financial Management Association European Conference, Glasgow,Scotland, UK, 12-14 June 2019 How to Cite? |
| Abstract | We study the role of goodwill, a form of intangible assets arising from past mergers and acquisitions, on asset pricing. We find that goodwill-to-sales strongly and negatively predicts the cross-section of stocks returns, especially among firms with cross-industry M&A histories and firms with overconfident CEOs. It remains as an economically and statistically significant predictor of stock returns after adjusted by all known factors. Our results suggest that high goodwill-to-sales subsumes negative information on future firm value, and stock markets underreact to this information because the fair value of goodwill is unobservable and hard to evaluate. |
| Description | Session 90 - Determinants of Stock Returns |
| Persistent Identifier | http://hdl.handle.net/10722/278792 |
| DC Field | Value | Language |
|---|---|---|
| dc.contributor.author | Liu, X | - |
| dc.contributor.author | Yin, C | - |
| dc.contributor.author | Zheng, W | - |
| dc.date.accessioned | 2019-10-21T02:14:08Z | - |
| dc.date.available | 2019-10-21T02:14:08Z | - |
| dc.date.issued | 2019 | - |
| dc.identifier.citation | 2019 Financial Management Association European Conference, Glasgow,Scotland, UK, 12-14 June 2019 | - |
| dc.identifier.uri | http://hdl.handle.net/10722/278792 | - |
| dc.description | Session 90 - Determinants of Stock Returns | - |
| dc.description.abstract | We study the role of goodwill, a form of intangible assets arising from past mergers and acquisitions, on asset pricing. We find that goodwill-to-sales strongly and negatively predicts the cross-section of stocks returns, especially among firms with cross-industry M&A histories and firms with overconfident CEOs. It remains as an economically and statistically significant predictor of stock returns after adjusted by all known factors. Our results suggest that high goodwill-to-sales subsumes negative information on future firm value, and stock markets underreact to this information because the fair value of goodwill is unobservable and hard to evaluate. | - |
| dc.language | eng | - |
| dc.publisher | Financial Management Association International. | - |
| dc.relation.ispartof | 2019 Financial Management Association European Conference | - |
| dc.title | The Invisible Burden: Goodwill and the Cross-Section of Stock Returns | - |
| dc.type | Conference_Paper | - |
| dc.identifier.hkuros | 307559 | - |