Value of strategic alliances: Evidence from the bond market

Chou, Ting Kai; Ou, Chin S.; Tsai, Shu Huan

doi:10.1016/j.jbankfin.2014.01.033

Cited by 16 publications

(17 citation statements)

References 76 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Contrary to the distress risk argument, we find that auditors are less likely to issue going‐concern modified opinions when there is an increase in strategic alliances, as either the prominence of senior alliance partners may help junior alliance partners to attract investors (Puri ; Gande, Puri, Saunders, and Walter ; Stuart, Hoang, and Hybels ) or the reputation of alliance partners may help firms gain access to credits (Saxton ; Fang, Francis, Hasan, and Wang ; Chou, Ou, and Tsai ). Alternatively, we use an updated version of Altman's Z‐Scores (Altman , ) to capture a firm's financial health and further find that an increase in strategic alliances is associated with a reduction in bankruptcy risk.…”

Section: Introductioncontrasting

confidence: 82%

Audit Pricing for Strategic Alliances: An Incomplete Contract Perspective

Demirkan

Zhou

2015

Contemporary Accting Res

View full text Add to dashboard Cite

We study the pricing of audit services for strategic alliances, a governance structure involving an incomplete contract between separate firms. Since incomplete contracts do not specify all future contingencies, we expect that the nonverifiability of information and potential agency behavior in alliances increase audit complexity, resulting in higher audit fees. Our findings support this prediction. We then separate strategic alliances into joint ventures and contractual alliances, as the latter involve more complexity. We find that our audit fee results are largely driven by contractual alliances. We perform additional tests to rule out the concern that our audit fee results might be attributable to the impact of strategic alliances on distress risk, audit risk, or control risk. Contrary to the distress risk argument, we find that auditors are less likely to issue going‐concern modified opinions when there is an increase in strategic alliances. Contrary to the audit risk argument, we find that an increase in strategic alliances is unrelated to the likelihood of financial misstatements. Contrary to the control risk argument, we find that an increase in strategic alliances is unrelated to internal control weakness opinions.

show abstract

Section: Introductioncontrasting

confidence: 82%

Audit Pricing for Strategic Alliances: An Incomplete Contract Perspective

Demirkan

Zhou

2015

Contemporary Accting Res

View full text Add to dashboard Cite

show abstract

“…The results also show that alliance firms use both external and internal funds to finance R&D activities. Alliance firms have greater access to capital markets due to their ability to create several benefits including the creation of resources, the lower cost of debt, and sending a positive signal to the market (Chou et al, ). The findings of this study have important academic and policy implications.…”

Section: Discussionmentioning

confidence: 99%

“…Todeva and Knoke () pointed out that a strategic alliance helps firms to overcome the problems of weaker institutions, such as legal, political, and cultural barriers. Chou et al () stated that a strategic alliance helps firms to reduce transaction costs, accumulate more productive resources, send a positive signal to the market, reduce the information asymmetry, and reduce the cost of debt. These benefits, along with the possibility of organisational ambidexterity (Junni et al, ) in the case of strategic alliances (Lin et al, ), may help the firms to circumvent the barriers of weaker institutions in the emerging markets and attract exogenous lenders.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

2017

View full text Add to dashboard Cite

This paper examines the financing behaviour of research and development (R&D) investments in emerging markets. Drawing on institutional theory and using panel data of generalized methods of moment estimation for a sample of 302 firms from 20 countries during the period 2003–2015, we find that emerging market firms tend to use internal funds for financing R&D investments. Interesting results emerged when the sample was divided as alliance and non‐alliance firms, and bank‐based and market‐based financial systems. The results show that R&D financing behaves differently for alliance and non‐alliance firms. Alliance firms use both internal and external funds for R&D investments, while non‐alliance firms do not use external funds. We also document that a country's financial system influences the choice of available sources of finance. Firms from countries that follow a bank‐based financial system tend to rely on external funds while firms from countries that follow a market‐based financial system depend more on internal funds for financing R&D investments. This study is important as it provides new evidence on financing R&D investments in emerging countries taking into account the institutional arguments of financing choices, and so should guide stakeholders about appropriate sources of R&D financing.

show abstract

“…On average, alliances yield positive gains to the partnering firms. In particular, the returns to both stockholders and bondholders around the announcement of strategic alliances indicate that such alliancesdifferent from joint ventures 1 -result, on average, in positive gains for both stockholders (Chan et al 1997;Chen et al 2013) and bondholders (Chen et al 2015;Chou et al 2014).…”

Section: Introductionmentioning

confidence: 99%

“…In recent years, the valuation implications of strategic alliances have been the object of several empirical research papers in finance (Chan et al, 1997;Chen et al, 2013;Palia et al, 2008;Chen et al, 2015;Chou et al, 2014). On average, alliances yield positive gains to the partnering firms.…”

Section: Introductionmentioning

confidence: 99%

Stock Market Response to Multiple Alliance Announcements

Tewari

Ramanlal²,

Kumar³

et al. 2020

IJFBS

View full text Add to dashboard Cite

We document frequency distribution of 4315 two-party, non-equity alliances undertaken by the U.S. based firms between 1986 and 2015 in 11industries and find that on an aggregate basis, the firms which form multiple alliances based on the exploitation motive are as likely to enter into alliance as the firms that enter into multiple alliances based on the exploration motive. However, we find strong evidence that the firms that enter into alliances on three or more occasions are driven by the exploration motive while, the firms that enter into alliances one and one or two times are driven by the exploitation motive. The average cumulative abnormal returns (ACAR) for all of the three subsamples of firms that undertook one, one or two, and three or more alliances during the time period for this study are all positive but exhibit a declining trend. Firms that are larger in terms of total assets engage more frequently in alliances than smaller firms. Returns to firms that enter into three or more alliances are sensitive to the leverage employed and the likelihood of bankruptcy whereas returns to firms that enter into only one or one or two alliances are affected significantly by the considerations of competitive forces.

show abstract

Value of strategic alliances: Evidence from the bond market

Cited by 16 publications

References 76 publications

Audit Pricing for Strategic Alliances: An Incomplete Contract Perspective

Audit Pricing for Strategic Alliances: An Incomplete Contract Perspective

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

Stock Market Response to Multiple Alliance Announcements

Contact Info

Product

Resources

About