Joint venture investments and the market value of the firm

Edward Jones and Jo Danbolt

Applied Financial Economics, 2004, vol. 14, issue 18, 1325-1331

Abstract: The impact of Joint Venture announcements on the market value of UK listed companies is examined. Based on a sample of 158 announcements of either joint venture formation or joint venture activities, significant positive market-adjusted abnormal returns of 0.5% on the announcement date are observed. Cross-sectional analysis reveals that abnormal returns are significantly lower when undertaken by large companies, or where the project is located in Asia. On the other hand, market-adjusted returns are found to be significantly higher when the project is large compared to the size of the company undertaking the investment, and where the project is either domestic or located within the European Union.

Date: 2004
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DOI: 10.1080/09603100412331313569

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