Strategic Alliance Announcements Research Articles

Green innovation and cross-border strategic alliance announcements: Evidence from China

This paper investigates how corporate green innovation affects the formation of cross-border strategic alliances. The results show that firms in China developing green innovation have a greater chance of forming cross-border strategic alliances. This positive effect is more pronounced for Chinese firms with environmental disclosure and located in cities with stricter environmental regulations. Our study sheds light on how green innovation affects the formation of cross-border strategic alliances and has important implications for Chinese firms seeking to build a cross-border strategic alliance.

The impact of corruption on market reactions to international strategic alliances

Drawing on institutional theory, we argue that the level of corruption in an alliance partner’s country negatively affects the market reaction to a focal firm’s international strategic alliance announcement, as corruption creates uncertainty regarding the behavior of the partner firm. We further propose that anti-bribery laws in the focal firm’s home country strengthen the negative relation between corruption and market reactions, while the focal firm’s experiences in challenging institutional environments potentially attenuate the relationship. Our empirical analysis covers more than 1,000 international strategic alliance announcements involving firms from 30 countries. The findings indicate the importance of corruption as a facet of the institutional environment that shapes firms’ value creation opportunities and risks in international alliances.

R&D intensity, cross-border strategic alliances, and valuation effects

This paper examines the role of R&D intensity in cross border strategic alliance formation. Firms can exploit their existing R&D capabilities by entering into overseas markets via strategic alliances. Consistent with our hypothesis, we find R&D intensity to be a major determinant of cross-border strategic alliance decisions involving US firms. R&D intensive firms prefer alliances in Continental Europe and Emerging Asia-Pacific regions. R&D intensity, however, cannot distinguish between the ownership forms of the overseas partner as the firm may not have the opportunity to choose the nature of the partner once the alliance decision has been made. Finally, we examine the valuation effect of cross-border strategic alliance announcements and find the associated wealth effects to be driven primarily by R&D intensity.

The impact of strategic alliances on the market value of telecommunications firms

This paper analyzes the impact of 130 strategic alliance announcements involving European telecommunications firms on capital markets. We use the event study methodology. We define the event as the public announcement of an alliance initiative by a firm in the media. Specifically, the data was collected from alliance-related news items posted in the Press Release pages in corporate websites. Our findings indicate that investors appreciate the importance of alliance initiatives by European telecommunications firms, and this is reflected in their effect on the volatility of share prices surrounding announcement date. In view of the null effect of alliances on returns, however, it would seem that the expectations generated in the market are mixed. On considering the influence of firm-specific characteristics on the effects of alliances disclosure in capital markets, our results show that in young companies, with a smaller size, less profitable, and with growth perspectives more uncertain, the effect of announcements of alliances is negative. Comparison of our results with the evidence for the US market reveals a smaller reaction in European markets which could be explained by both differences in the legislative, economic and social environment and the specific features of the firms operating in the two markets.

Internalization strategies and value implications of latin american emerging market multinationals

This study investigates the Internationalization strategies and their value implications of Latin American Emerging Market Multinationals (LAEMMs). We examine 66 mergers and acquisitions (M&A) announcements, 20 joint venture (JV) announcements and 9 Strategic Alliance (SA) announcements associated with LAEMMs during the sample period of 1991-2005. First, the paper explores the effects of cross-border expansion patterns on firm value creation. Second, it examines market reaction to the announcements of cross-border expansion patterns. Third, it evaluates firm performance in relation to the cross-border expansion activities. This study finds that most LAEMMs do not earn significantly positive abnormal returns during the event windows defined in this study. However, it is generally evident that there is value creation in international expansion activities. According to the event-study results, value creation is mostly associated with SAs. This finding is consistent with previous research. It is also indicated that most SA announcements are received by the market positively. JVs also experience value creation during the event windows utilized in this study. However, value creation of JVs is not to the extent that of SAs. Market reaction to JV announcements is also positive, but not to the degree of SAs.

Fundamental Analysis of Firm Performance Following Strategic Alliance Announcements

We examine whether accounting-based fundamental analysis can predict long term market performance in a strategic alliance context. We first evaluate whether Mohanram's (2005) G-Score explains differences in long-term buy and hold returns following announcements that firms have formed strategic alliances. We show that the G-Score does help explain future market performance following alliance announcements; however, Mohanram's signals focus on the financial characteristics of individual firms and may fail to account fully for the intangible benefits of interfirm relationships. From information disclosed in the alliance announcements and other context-specific information, we develop an alliance score (A-Score) that alone and in conjunction with the G-Score explains differences in future returns. We also document that the market does not correctly predict long term performance for the firms participating in the alliances. These results suggest that prior research that focuses on the short term reaction to alliance announcements, may overstate the benefits of alliances.

The Market Impact of Strategic Alliance Announcements in the European Telecommunication Industry

Purpose: This paper analyzes the impact of 130 strategic alliance announcements involving European telecommunications firms on capital markets over the period 2003-2005. Methodology/Approach: We use the event study methodology. We define the event as the public announcement of an alliance initiative by a firm in the media. Specifically, the data was collected from alliance-related news items posted in the Press Release pages in corporate websites. Findings: Our findings indicate that investors appreciate the importance of alliance initiatives by European telecommunications firms, and this is reflected in their effect on the volatility of share prices surrounding announcement date. In view of the null effect of alliances on returns, however, it would seem that the expectations generated in the market are mixed. Comparison of our results with the evidence for the US market reveals a smaller reaction in European markets which could be explained by both differences in the legislative, economic and social environment and the specific features of the firms operating in the two markets. Research limitations/implications: It would be interesting establish whether the market effect of alliances changes if the differing characteristics of the firms involved are taken into account, or if alliances are more tightly defined (international or national, number of partners ). Moreover, further comparative studies between high- and low-tech sectors are needed. Originality/value of paper: The view of the capital markets is of particular interest to the telecommunications industry, because firms rely heavily on them for funding. Understanding how the capital markets view and value alliances is therefore critical to strategic management and communication. Moreover, this study extends previous research in the telecommunications industry by examining European firms.

The impact of M&A and joint ventures on the value of IT and non-IT firms

This paper aims to study and provide empirical evidence on the impact of mergers and acquisitions (M&A) and joint ventures on the value of IT and non-IT firms. Using the event study methodology, we investigate the effect of such strategic alliance announcements on firm value in a sample of 170 firms. The results show that such strategic alliance announcements create significant gains in firm value. When the sample is divided into IT and non-IT firms, we find stronger support for positive impact on gains in firm value among non-IT firms than among IT firms. We also find that the smaller strategic alliance partners perform better than their larger partners. However, we fail to find any significant difference in impact on firm value between merger/acquisition and joint venture announcements.

Trading Strategies Based on Analyst Estimate Revision Clusters and Associated Corporate Information Events

This paper examines trading strategies based on clusters of analysts9 earnings estimate revisions and their triggering corporate information events (CIEs). We find that the profitability of long and short positions depends on the nature of triggering event as well as the sign of price movements at the beginning of the cluster. Long positions based on revision clusters associated with earnings and stand-alone guidance CIEs result in meaningful average excess returns. Short positions based on revision clusters associated with earnings result in small but statistically significant excess returns. Short positions in revision clusters associated with stand-alone guidance and positions in clusters associated with other types of corporate information events (e.g., corporate presentations, IPO filings, M&amp;A, and other joint venture or strategic alliance announcements) generally do not yield positive excess returns. This indicates that there is value to matching revision clusters and triggering events when developing trading strategies based on revision clusters. <b>TOPICS:</b>In markets, big data/machine learning

The Effects of High-Tech Companies' Strategic Alliance Announcements on the Stock Prices of the Relevant Companies: A Comparative Analysis of Indirect Benefits for Taiwan's High-Tech Industry Versus Other Industries 1998–2002

In recent years, the formation of strategic alliances has become an increasingly common trend among developing countries around the world. In spite of this, the numerous attempts to comprehensively review the research on the correlation between these strategic alliances and stock prices over the years have, by and large, limited their discussion to how the stock price of a corporation responds to its announcement that it is forming a strategic alliance. Only a few studies have, however, discussed the announcement's indirect impact on the stock prices of investing companies that have entered into such strategic alliances. It is for this reason that we conduct an event study and develop an empirical model to measure that indirect impact on the stock prices of investing companies engaging in strategic alliances with Taiwan's high-tech industry from 1998 to 2002, while also discussing the market's different responses in their stock prices according to various industrial types that have been used to classify these investing companies.

The impact of strategic alliances on shareholder wealth: the role of growth opportunity

The main purpose of this study is to examine the impact of strategic alliances on shareholder wealth while also considering the role of firm growth opportunity. By focusing on Taiwan Stock Exchange-listed firms that announced the formation of such alliances from 1996 to 2000, a sample of 140 firms is obtained using event study. The empirical results indicate that the effect of strategic alliance announcements on shareholder wealth is significantly negative for high-growth firms; while high-growth firms forming intra-industry alliances or partner with foreign companies have better announcement effects. For low-growth firms, inter-industry alliances and partnerships with domestic firms have better announcement effects. The findings also indicate that nonequity alliances are appropriate for high-growth firms, while more value accrues to low-growth firms where alliances with equity are involved. Finally, in the case of R&D alliances, the effect of the alliance announcement on shareholder wealth for high-growth firms is superior to that of low-growth firms.

The source of abnormal returns from strategic alliance announcements

This study links together theoretical models of strategic alliances with an empirical examination of stock returns on the announcement of strategic alliances. Using a sample of 123 strategic alliance announcements, the results find strong support for the hypothesis that strategic alliance announcements generate significant positive abnormal returns on the announcement day. Although strategic alliances are more prevalent in the higher technology industries, the source of the abnormal stock returns is a subsample of firms with the lowest market to book values. This is found to be supportive of the hypothesis that the announcement of a strategic alliance is additional information for firms with low growth. There is no empirical support for the knowledge, flexibility and the hubris hypotheses.

The Share Price Responses and Determinants of Strategic Alliances in Taiwan's High-Tech Industry: A Quantile Regression Approach

This article investigates share price responses to strategic alliances in Taiwan's high-tech industry from 1996 to 1999. We analyze the determinants of abnormal returns caused by strategic alliances using a quantile regression estimation procedure. Our empirical findings show that the wealth effect for a strategic alliance is positive, with no evidence of a wealth transfer between alliance partners. In addition, intra-industry alliances show significantly higher abnormal returns than inter-industry alliances. The horizontal and vertical alliances both have significantly positive abnormal returns, but the positive effect of vertical alliances primarily comes from downstream buyers. On the other hand, results from a quantile regression model show that the P/B ratio, director and supervisor shareholding ratios, and R&amp;D ratio are important determinants of abnormal returns of strategic alliance announcements. Our empirical findings are consistent with the argument that the organizational flexibility offered by alliances is valuable to the high-tech industry which needs to cope with a fast-changing environment.

Does Partnering Pay Off? - Stock Market Reactions to Strategic Alliance Announcements in Germany

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.