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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 Series

Date posted: November 09, 2000 ; Last revised: March 13, 2001

Suggested Citation

Allen, Jeffrey and Phillips, Gordon M., Corporate Equity Ownership, Strategic Alliances and Product Market Relationships (December 1999). Available at SSRN: http://ssrn.com/abstract=244727 or doi:10.2139/ssrn.244727

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Contact Information

Gordon M. Phillips (Contact Author) University of Maryland - Department of Finance ( email ) Robert H. Smith School of Business 4425 Van Munching Hall College Park, MD 20742 United States 301-405-0347 (Phone) 301-405-0359 (Fax) HOME PAGE: http://www.smith.umd.edu/faculty/gphillips/research.html
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
Jeffrey Allen Southern Methodist University (SMU) - Edwin L. Cox School of Business ( email ) P.O. Box 750333 Finance Department Dallas, TX 75275-0333 United States 214-768-2627 (Phone) 214-768-4099 (Fax)