The Share Price Responses and Determinants of Strategic Alliances in Taiwan's High-Tech Industry: A Quantile Regression Approach

Ya-Hui Wang () and Chien-Tai Wu ()
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Ya-Hui Wang: Department of Finance, Kai Nan University, Taoyuan, Taiwan, ROC
Chien-Tai Wu: Department of Finance, National Central University, Chung-Li, Taiwan, ROC;

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2004, vol. 07, issue 03, 355-378

Abstract: This article investigates share price responses to strategic alliances in Taiwan's high-tech industry from 1996 to 1999. We analyze the determinants of abnormal returns caused by strategic alliances using a quantile regression estimation procedure. Our empirical findings show that the wealth effect for a strategic alliance is positive, with no evidence of a wealth transfer between alliance partners. In addition, intra-industry alliances show significantly higher abnormal returns than inter-industry alliances. The horizontal and vertical alliances both have significantly positive abnormal returns, but the positive effect of vertical alliances primarily comes from downstream buyers. On the other hand, results from a quantile regression model show that the P/B ratio, director and supervisor shareholding ratios, and R&D ratio are important determinants of abnormal returns of strategic alliance announcements. Our empirical findings are consistent with the argument that the organizational flexibility offered by alliances is valuable to the high-tech industry which needs to cope with a fast-changing environment.

Keywords: Strategic alliance; high-tech industry; event study; quantile regression; JEL Classification G14; JEL Classification G34; JEL Classification L22 (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2004
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0219091504000184

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