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Do strategic alliances in a developing country create firm value? Evidence from Korean firms

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  • Lee, Hyunchul
  • Cho, Euije
  • Cheong, Chongcheul
  • Kim, Jinsu

Abstract

This paper examines the impact of strategic alliances on the increment of firm value in the case of Korean firms. For this, we apply an event study using OLS and GARCH market models. The results of our study show that, strategic alliances in Korea produce significant positive abnormal returns before and at the announcement date, indicating an increase in firm value. This firm value augmented by alliance announcements does not have any relationship with firms' growth but has an inverse relationship with firms' sizes. Interestingly, non-technological marketing alliances contribute to increasing firm value more than technological alliances do, regardless of partner firms' nationality. This evidence is contrasted to the cases of firms in advanced countries. Particularly, Korean firms' marketing alliances with firms in advanced G7 countries contribute to largely increasing the firm value of the former.

Suggested Citation

  • Lee, Hyunchul & Cho, Euije & Cheong, Chongcheul & Kim, Jinsu, 2013. "Do strategic alliances in a developing country create firm value? Evidence from Korean firms," Journal of Empirical Finance, Elsevier, vol. 20(C), pages 30-41.
    • Handle: RePEc:eee:empfin:v:20:y:2013:i:c:p:30-41
    DOI: 10.1016/j.jempfin.2012.10.003
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    Cited by:

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    3. Juasrikul, Sakdipon & Sahaym, Arvin & Yim, Hyunsoon (Sean) & Liu, Richie L., 2018. "Do cross-border alliances with MNEs from developed economies create firm value for MNEs from emerging economies?," Journal of Business Research, Elsevier, vol. 93(C), pages 98-110.
    4. Yue Li & Hang Guo & Sarah Yvonne Cooper & Hongqi Wang, 2019. "The Influencing Factors of the Technology Standard Alliance Collaborative Innovation of Emerging Industry," Sustainability, MDPI, vol. 11(24), pages 1-17, December.
    5. Chou, Ting-Kai & Ou, Chin-Shyh & Tsai, Shu-Huan, 2014. "Value of strategic alliances: Evidence from the bond market," Journal of Banking & Finance, Elsevier, vol. 42(C), pages 42-59.
    6. Hyunchul Lee & Kyungtag Lee & Jong Ha Lee, 2021. "The Various Effects of Technology Trade on the Sustainable Market Value of Firms in OECD Countries," Sustainability, MDPI, vol. 13(22), pages 1-20, November.
    7. Peng, Xuan & Jia, Yibo & Chan, Kam C. & Wang, Xiongyuan, 2021. "Let us work together: The impact of customer strategic alliances on IPO underpricing and post-IPO performance," Journal of Corporate Finance, Elsevier, vol. 67(C).
    8. Aguir, Iness & Misra, Lalatendu, 2017. "Ownership level choice and value creation in international joint ventures: The role of investor protection," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 515-535.

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    More about this item

    Keywords

    Abnormal returns; Cumulative abnormal returns; Event study; Marketing alliances; Technology alliances;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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