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

Author

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  • Ya-Hui Wang

    (Department of Finance, Kai Nan University, Taoyuan, Taiwan, ROC)

  • Chien-Tai Wu

    (Department of Finance, National Central University, Chung-Li, Taiwan, ROC;
    Department of Finance, Takming College, Taipei, Taiwan, ROC)

Abstract

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&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.

Suggested Citation

  • Ya-Hui Wang & Chien-Tai Wu, 2004. "The Share Price Responses and Determinants of Strategic Alliances in Taiwan's High-Tech Industry: A Quantile Regression Approach," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 355-378.
    • Handle: RePEc:wsi:rpbfmp:v:07:y:2004:i:03:n:s0219091504000184
    DOI: 10.1142/S0219091504000184
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    Citations

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    Cited by:

    1. Thomas Canace & Steven Mann, 2014. "The impact of technology-motivated M&A and joint ventures on the value of IT and non-IT firms: a new examination," Review of Quantitative Finance and Accounting, Springer, vol. 43(2), pages 333-366, August.
    2. Yu-Yen Ku & Tze-Yu Yen, 2016. "Heterogeneous Effect of Financial Leverage on Corporate Performance: A Quantile Regression Analysis of Taiwanese Companies," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(03), pages 1-33, September.

    More about this item

    Keywords

    Strategic alliance; high-tech industry; event study; quantile regression; JEL Classification G14; JEL Classification G34; JEL Classification L22;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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