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A reexamination of value creation through strategic alliances

Author

Listed:
  • Uri Ben-Zion
  • Koresh Galil
  • Mosi Rosenboim
  • Hadas Shabtay

Abstract

This paper uses a sample of 335 firms participating in non-equity and minority equity strategic alliances to reexamine value creation through strategic alliances. We show that the immediate positive response of stock markets to new strategic alliances is followed by negative abnormal returns. Twenty days after announcements, a cumulative positive abnormal return is only evident for those firms with the highest stock market response to the announcement. We relate the positive abnormal returns reported in previous research to the presence of short-run overreaction on stock markets and conclude with the market's ability to identify those alliances that are more valuable.

Suggested Citation

  • Uri Ben-Zion & Koresh Galil & Mosi Rosenboim & Hadas Shabtay, 2011. "A reexamination of value creation through strategic alliances," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 3(2/3), pages 133-154.
    • Handle: RePEc:ids:injbaf:v:3:y:2011:i:2/3:p:133-154
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    Cited by:

    1. Mani, Sudha & Luo, Xueming, 2015. "Product alliances, alliance networks, and shareholder value: Evidence from the biopharmaceutical industry," International Journal of Research in Marketing, Elsevier, vol. 32(1), pages 9-22.

    More about this item

    Keywords

    strategic alliances; market overreaction; event study; value creation; stock markets; market response; abnormal returns.;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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