Do strategic alliances in a developing country create firm value? Evidence from Korean firms |
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| Institution: | 1. Said Business School, University of Oxford, Park End Street, Oxford OX1 1HP, UK;2. Judge Business School, University of Cambridge, Trumpington Street, Cambridge CB2 1AG, UK;1. Università Cattolica, Dipartimento di Economia e Finanza, Milano, Italy;2. Norges Bank, Norway;3. BI Norwegian Business School, Norway;1. Department of Finance, College of Commerce, National Chengchi University, Taiwan;2. Department of Finance, College of Management, National Taiwan University, Taiwan;3. Institute of Finance, College of Management, National Chiao Tung University, Taiwan;4. Department of Finance, College of Management, and Center for Research in Econometric Theory and Application, National Taiwan University, Taiwan |
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| Abstract: | This paper examines the impact of strategic alliances on the increment of firm value in the case of Korean firms. For this, we apply an event study using OLS and GARCH market models. The results of our study show that, strategic alliances in Korea produce significant positive abnormal returns before and at the announcement date, indicating an increase in firm value. This firm value augmented by alliance announcements does not have any relationship with firms' growth but has an inverse relationship with firms' sizes. Interestingly, non-technological marketing alliances contribute to increasing firm value more than technological alliances do, regardless of partner firms' nationality. This evidence is contrasted to the cases of firms in advanced countries. Particularly, Korean firms' marketing alliances with firms in advanced G7 countries contribute to largely increasing the firm value of the former. |
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