Shareholder Value and Risk Effects of Strategic Alliances
This study examines how alliances affect the value and systematic risk of smaller and larger alliance partners. We find smaller partners generally gain from alliances and larger partners generally suffer significant losses. We examine this pattern for different types of alliances, experience with alliances, R&D intensity and relatedness of alliance partners. Gains to the smaller partners are particularly pronounced for technical partners, for smaller partners with high R&D intensity, and for related technical alliances. We also provide evidence that the systematic risk of both alliance partners declines following an alliance announcement, possibly explaining why larger firms engage in alliances with smaller partners despite the limited prospect for gains in market value.
shareholder value, alliances, systematic risk, market value
Finance and Financial Management
Journal of Marketing and Strategic Management
TURK, Thomas; YBARRA, Candace; GOH, Choo Yong, Jeremy; HSU Junming; and LI, Li-ling.
Shareholder Value and Risk Effects of Strategic Alliances. (2016). Journal of Marketing and Strategic Management. 10, 120-138. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/5047