An Empirical Analysis of Strategic Alliance in Taiwan-Illustrate by IT Electronics Industry
Date Issued
2008
Date
2008
Author(s)
Huang, Wei-Na
Abstract
This study is using event-study methodology to examine the stock abnormal returns on the anncouncement of strategic alliances. The sample consists of 96 strategic alliance announcements made by Taiwanese IT electronics industry listed firms during January 1998 to December 2007. In addition, we examine the key factors- firm size, cultural distance, free cash flow, tobin’s Q, debt ratio and R&D expenditure of the wealth effect of Taiwanese strategic alliance announcement. The results find that Taiwan stock market responded the strategic alliance announcements mostly with positive abnormal returns, but the problem that announcements leak-out in advance still exist . Moreover, we only find partial support for the hypothesis that international strategic alliances will have relatively higher abnormal returns. Our results find strong support for the hypothesis that firms with smaller size have more favorable stock price reaction. This evidence is consistent with previous research. From the cross-sectional regression results, firm size and debt ratio are factors that have inverse relationship with the stock market response to announced strategic alliances. The result rejects the debt monitoring hypothesis.
Subjects
Event study
strategic alliance
IT electronics industry
stock price
Type
thesis
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