The source of abnormal returns from strategic alliance announcements

Jesse Brooke; Barry Oliver

doi:10.1016/j.pacfin.2004.07.003

The source of abnormal returns from strategic alliance announcements

Jesse Brooke, Barry Oliver^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

11 Citations (Scopus)

Abstract

This study links together theoretical models of strategic alliances with an empirical examination of stock returns on the announcement of strategic alliances. Using a sample of 123 strategic alliance announcements, the results find strong support for the hypothesis that strategic alliance announcements generate significant positive abnormal returns on the announcement day. Although strategic alliances are more prevalent in the higher technology industries, the source of the abnormal stock returns is a subsample of firms with the lowest market to book values. This is found to be supportive of the hypothesis that the announcement of a strategic alliance is additional information for firms with low growth. There is no empirical support for the knowledge, flexibility and the hubris hypotheses.

Original language	English
Pages (from-to)	145-161
Number of pages	17
Journal	Pacific Basin Finance Journal
Volume	13
Issue number	2
DOIs	https://doi.org/10.1016/j.pacfin.2004.07.003
Publication status	Published - Mar 2005

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10.1016/j.pacfin.2004.07.003

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abstract = "This study links together theoretical models of strategic alliances with an empirical examination of stock returns on the announcement of strategic alliances. Using a sample of 123 strategic alliance announcements, the results find strong support for the hypothesis that strategic alliance announcements generate significant positive abnormal returns on the announcement day. Although strategic alliances are more prevalent in the higher technology industries, the source of the abnormal stock returns is a subsample of firms with the lowest market to book values. This is found to be supportive of the hypothesis that the announcement of a strategic alliance is additional information for firms with low growth. There is no empirical support for the knowledge, flexibility and the hubris hypotheses.",

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The source of abnormal returns from strategic alliance announcements

Abstract

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