When Does Partnering Create Market Value? A Transaction Cost and Signaling Theory Approach

European Management Journal, Vol. 24, No. 1, pp. 1-15, 2006

33 Pages Posted: 9 Aug 2007  

Carolin Häussler

University of Passau

Abstract

The dramatic increase in interorganizational partnering in the last two decades raises questions regarding the value impact of alliances. Using event study methodology, this paper tests whether stock market reactions differ when an alliance formation or termination is announced. In addition, it provides an in-depth analysis of potential determinants of stock market reactions. The results show that transaction cost theory and signaling theory in tandem provide predictive power explaining the effects of formation and termination announcements. However, the theories propose contradicting effects regarding the impact of firm and alliance characteristics on the value mark-up.

Keywords: Firm valuation, Alliances, Transaction cost theory, Signaling theory, Stock market reactions

JEL Classification: G14, L22, D23

Suggested Citation

Häussler, Carolin, When Does Partnering Create Market Value? A Transaction Cost and Signaling Theory Approach. Available at SSRN: https://ssrn.com/abstract=1005569

Carolin Haeussler (Contact Author)

University of Passau ( email )

Innstrasse 27
Passau, 94032
Germany

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