The market value spillovers of technological acquisitions: Evidence from <scp>patent‐text</scp> analysis

Testoni, Marco

doi:10.1002/smj.3355

Cited by 12 publications

(7 citation statements)

References 62 publications

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“…Future research can similarly study the externalities created by companies and investors, even if their actions don't fall under the ESG umbrella. This may involve studying the impact of corporate decisions on other stakeholders (e.g., Bernile & Lyandres [2019], Cunningham et al [2021], and Testoni [2022] for M&A) or the spillover effects of engagement from non-ESG investors (e.g., Agrawal & Tambe [2016], Bernstein & Sheen [2016], Cohn et al [2021], and Fracassi et al [2022] for private equity).…”

Section: Implications For Researchmentioning

confidence: 99%

“…This may involve studying the impact of corporate decisions on other stakeholders (e.g., Bernile & Lyandres [2019], Cunningham et al. [2021], and Testoni [2022] for M&A) or the spillover effects of engagement from non‐ESG investors (e.g., Agrawal & Tambe [2016], Bernstein & Sheen [2016], Cohn et al. [2021], and Fracassi et al.…”

Section: Implications For Researchmentioning

confidence: 99%

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The end of ESG

Edmans

2023

Financial Management

109

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ESG is both extremely important and nothing special. It's extremely important because it's critical to long-term value, and so any academic or practitioner should take it seriously, not just those with "ESG" in their research interests or job title. Thus, ESG doesn't need a specialized term, as that implies it's niche-considering long-term factors isn't ESG investing; it's investing. It's nothing special since it's no better or worse than other intangible assets that create long-term financial and social returns, such as management quality, corporate culture, and innovative capability. Companies shouldn't be praised more for improving their ESG performance than these other intangibles; investor engagement on ESG factors shouldn't be put on a pedestal compared to engagement on other value drivers. We want great companies, not just companies that are great at ESG.

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Section: Implications For Researchmentioning

confidence: 99%

Section: Implications For Researchmentioning

confidence: 99%

The end of ESG

Edmans

2023

Financial Management

109

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“…Another type of signal concerns the resources and capabilities of a firm, which can provide information about the firm's competitive position and potential for future success (e.g., Belderbos, Park, & Carree, 2021;Laamanen, 2007;Shan, Fu, & Zheng, 2017;Testoni, 2022;Yang, Narayanan, & De Carolis, 2014). For instance, Laamanen (2007) showed that a high acquisition premium evokes positive market reactions when firms acquire valuable technological resources from target firms that are difficult to value.…”

Section: Information Problemmentioning

confidence: 99%

What Do Investors Value? A Multidisciplinary Review

Guo

2023

Journal of Management

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This study offers a comprehensive and multidisciplinary review of the research on the antecedents of investor valuation in the management, accounting, and finance literature. Despite the growing recognition of the importance of investors and financial markets, our current understanding of the factors that drive investor valuation remains incomplete. To address this gap, we classify the existing literature on investor valuation into three perspectives: social, cognitive, and economic. The social perspective examines how social forces, such as institutional norms and pressure, shape investor valuation. The cognitive perspective focuses on the psychological underpinnings of investors’ valuation decisions, while the economic perspective emphasizes how investors determine the value of firms through rational cost-and-benefit calculations. This review compares the research on investor valuation in the management literature to that in the accounting and finance literature, identifying gaps in the management literature and discussing emerging trends that may influence investor valuation. The review also proposes an agenda for future research. In conclusion, this study illuminates the intricate and multifaceted nature of investor valuation, as well as the underlying factors that influence it.

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“…As the quantified text is typically expressed as a vector, using the cosine similarity has already become the established approach, mainly due to its simplicity and ease of interpretation as the angle between two word vectors on a unit sphere. Brown and Tucker (2011) (Arts, Cassiman, & Gomez, 2018;Kelly, Papanikolaou, Seru, & Taddy, 2021;Testoni, 2021). The list of potential applications is virtually limitless, which makes finding an accurate and accessible technology even more desirable.…”

Section: Literature Reviewmentioning

confidence: 99%

Using Textual Analysis to Diversify Portfolios

Pungulescu¹

2022

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Semantic fingerprinting is a leading AI solution that combines recent developments from cognitive neuroscience and psycholinguistics to analyze text with human-level accuracy. As an efficient method of quantifying text, it has already found its application in finance where the semantic fingerprints of company descriptions have been shown to successfully predict stock return correlations of Dow Jones Industrial Average (DJIA) constituents. By extension, it has been suggested that diversified portfolios could be constructed to exploit the fundamental (dis)similarity between companies’ core activities (measured by the semantic overlap of company descriptions). This paper follows the performance of two portfolios made of the same DJIA constituent companies: the “minimum semantic concentration” portfolio (constructed with text-based portfolio weights) and the traditional “minimum variance” portfolio, over a time span of 16 years including two high volatility events: the 2007 − 2009 financial crisis and the COVID pandemic. The results confirm that textual analysis using semantic fingerprinting is consistently successful in predicting stock return correlations and is valuable as a portfolio selection criterion. However, in times of high market volatility the fundamental information given by the companies’ core activities, while still relevant, might carry less weight.

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The market value spillovers of technological acquisitions: Evidence from patent‐text analysis

Cited by 12 publications

References 62 publications

The end of ESG

The end of ESG

What Do Investors Value? A Multidisciplinary Review

Using Textual Analysis to Diversify Portfolios

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