Title: A reexamination of value creation through strategic alliances

Authors: Uri Ben-Zion, Koresh Galil, Mosi Rosenboim, Hadas Shabtay

Addresses: Department of Economics, Western Galilee College, P.O. Box 2125, Akko 24121, Israel. ' Department of Economics, Ben-Gurion University of the Negev, P.O. Box 653, Beer-Sheva 84105, Israel. ' Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, P.O. Box 653, Beer-Sheva 84105, Israel. ' Faculty of Management, Tel Aviv University, Tel Aviv 69978, Israel

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.

Keywords: strategic alliances; market overreaction; event study; value creation; stock markets; market response; abnormal returns.

DOI: 10.1504/IJBAAF.2011.041452

International Journal of Banking, Accounting and Finance, 2011 Vol.3 No.2/3, pp.133 - 154

Published online: 23 Jul 2011 *

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