EconPapers    
Economics at your fingertips  
 

The Wealth Effect of Domestic Joint Ventures: Evidence from Taiwan

Shao‐Chi Chang and Sheng‐Syan Chen

Journal of Business Finance & Accounting, 2002, vol. 29, issue 1‐2, 201-222

Abstract: This study presents important international evidence by examining the wealth effect of domestic joint ventures by Taiwanese firms. In opposite to United States evidence, we find that announcements of domestic joint ventures by Taiwanese firms are, on average, associated with significantly negative abnormal stock returns. We also find that the stock market response to announced domestic joint ventures is significantly positively related to the announcing firms’ investment opportunities, size of investment and debt ratio, and is significantly negatively related to the business relatedness variable. In contrast, free cash flow, firm size, relative firm size and managerial ownership are found to have no significant power in explaining the market response. Our results support the investment opportunities, synergy and complementarity hypotheses as well as a broad interpretation of the free cash flow hypothesis, but reject the absolute size, relative size and alignment‐of‐interests hypotheses. This study makes valuable contributions to the literature by providing the first direct evidence on the role of investment opportunities, synergy and alignment‐of‐interests in explaining the wealth effect of domestic joint ventures

Date: 2002
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/1468-5957.00429

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:29:y:2002:i:1-2:p:201-222

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0306-686X

Access Statistics for this article

Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

More articles in Journal of Business Finance & Accounting from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-08-08
Handle: RePEc:bla:jbfnac:v:29:y:2002:i:1-2:p:201-222