Corporate Equity Ownership, Strategic Alliances and Product Market Relationships

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.

Keywords: Equity Ownership, Strategic Alliances, Joint Ventures, Product Market Relationships

JEL Classification: G20

Accepted Paper Series