The Wealth Effect of Japanese-US Strategic Alliances

Authors: Chang, Shao-Chi¹; Chen, Sheng-Syan²; Lai, Jung-Ho³

Source: Financial Management, Volume 37, Number 2, Summer 2008 , pp. 271-301(31)

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Abstract:

We investigate the wealth impact for Japanese and US firms that announce nonequity strategic alliances. We find that on average, both Japanese and US shareholders benefit from the formation of international alliances. We also find that shareholders earn larger abnormal returns in these alliances when the partnering firms are relatively small in size, have higher growth opportunities, or are less profitable. We show that both Japanese and US partnering firms display significant improvements in operating performance over the three-year period subsequent to the formation of international alliances.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1755-053X.2008.00013.x

Affiliations: 1: Shao-Chi Chang is a Professor of Finance at National Cheng Kung University in Tainan, Taiwan. 2: Sheng-Syan Chen is a Professor of Finance at National Taiwan University in Taipei, Taiwan. 3: Jung-Ho Lai is an Assistant Professor of Finance at National Taipei College of Business in Taipei, Taiwan.

Publication date: 2008-06-01