The effect of code-sharing alliance formations and terminations on firm value: The role of co-specialization and scope extension

Ulrich Wassmer and Pierre-Xavier Meschi

Journal of Air Transport Management, 2011, vol. 17, issue 5, 305-308

Abstract: This paper examines how alliance co-specialization and scope extension affect firm value at the time of alliance formation and termination, and whether value creation upon alliance formation also explains value creation upon termination. Building on the relational view of the firm, we develop predictions that are tested using event study methodology and data on code-sharing alliances formed, extended, and terminated between 1994 and 2008. The findings suggest that from a stock market perspective alliance formation and termination can be seen as two interrelated events and that it is difficult to reverse initial valuations past the alliance formation phase. They also suggest that the stock market reacts to alliance formation more critically than to post-formation decisions such as alliance scope extensions and terminations.

Keywords: Airline alliances; Airline alliance co-specialization; Airline alliance scope extension (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:17:y:2011:i:5:p:305-308

DOI: 10.1016/j.jairtraman.2011.03.005

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