Abstract
The dramatic increase in interorganizational partnering in the last 15 years raises questions for scholars and managers regarding the value impact of strategic alliances. Using event study methodology, this paper tests whether stock market reactions differ when an alliance formation or termination is announced. In addition, the study provides an in-depth analysis of potential determinants of stock market reactions to alliance formation announcements. The sample consists of 1037 announcements in German stock markets from 1997 to 2002. The results show that a termination announcement decreases firm valuation, and a formation announcement increases firm valuation. Further, certain alliances are more favorable than others, depending on firm industry, age, size, alliance constellations, and equity versus non-equity investment in partner firm. The results open avenues for further research on partnering strategies.
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