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Corporate Equity Ownership, Strategic Alliances and Product Market Relationships
Jeffrey Allen Southern Methodist University (SMU) - Edwin L. Cox School of Business Gordon M. Phillips University of Maryland - Department of Finance; National Bureau of Economic Research (NBER) December 1999 Abstract: This paper examines long-term block ownership by corporations and performance changes in firms with corporate block owners. We also examine potential reasons for corporate ownership including benefits in product market relationships, alleviation of financing constraints, and board monitoring by corporate owners. We find the largest significant increases in targets' stock prices, investment, and operating profitability when ownership is combined with product market relationships between purchasing and target firms, especially in industries with high research and development. Our findings are consistent with the conclusion that block ownership by corporations has significant benefits in product market relationships.
JEL Classifications: G20 Working Paper SeriesDate posted: November 09, 2000 ; Last revised: March 13, 2001Suggested CitationContact Information
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