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The valuation effect of corporate governance on stakeholder wealth: Evidence from strategic alliances

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  • Lai, Jung-Ho
  • Chen, Li-Yu

Abstract

This study aims to investigate the critical debate in corporate governance research concerning the boundary of the efficacy of the corporate governance mechanism. With particular focus on a specific set of firms' primary stakeholders, strategic alliance partners, our research design facilitates the examination of this issue. The results show a significantly positive association between a firm's corporate governance quality and the gains of its alliance partners. The proposition that firms with good governance more greatly value the interests of stakeholders whose devotion is critical is further supported by our findings of significantly positive moderating effects of the following three factors: a firm's growth potential, its business relatedness with its counterparts, and the activity types that the alliance encompasses (technical versus non-technical). Our research results suggest that firms, and thus shareholders, would economically benefit from managing their stakeholder relationships in a manner that positively affects firm prospects and shareholder wealth.

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  • Lai, Jung-Ho & Chen, Li-Yu, 2014. "The valuation effect of corporate governance on stakeholder wealth: Evidence from strategic alliances," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 117-131.
    • Handle: RePEc:eee:reveco:v:32:y:2014:i:c:p:117-131
    DOI: 10.1016/j.iref.2014.01.010
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    Cited by:

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    2. Hegde, Shantaram P. & Mishra, Dev R., 2017. "Strategic risk-taking and value creation: Evidence from the market for corporate control," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 212-234.
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    4. AlHares, Aws & Ntim, Collins, 2017. "A Cross- country study of the effect of institutional ownership on credit ratings," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(4), pages 80-99.
    5. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2015. "Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter?," International Review of Financial Analysis, Elsevier, vol. 41(C), pages 148-161.
    6. Carmen Talavera & Joan R. Sanchis, 2020. "Alliances between For-Profit and Non-Profit Organizations as an Instrument to Implement the Economy for the Common Good," Sustainability, MDPI, vol. 12(22), pages 1-22, November.
    7. AlHares, Aws & Ntim, Collins & King, David, 2018. "Block Ownership and Companies' R&D Intensity: The Moderating Effect Of Culture," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 15(2), pages 19-32.
    8. Faten Hanna Kerazan, Dr. & Ghaleb Abu Rumman & Hamzah Al Mawali & Nurah Musa Allozi, 2018. "The Impact of Corporate Governance upon the Performance Level of Jordanian Public Joint Stock Industrial Companies through Using the Balanced Scorecard (BSC)," Journal of Social Sciences (COES&RJ-JSS), , vol. 7(1), pages 1-14, January.
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    More about this item

    Keywords

    Corporate governance; Stakeholder theory; Strategic alliance;
    All these keywords.

    JEL classification:

    • 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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