New Evidence on Factors that Influence the Wealth Effects of International Joint Venture Announcements

Posted: 24 Feb 1999

See all articles by Stephen F. Borde

Stephen F. Borde

University of Central Florida - College of Business Administration

Ann Marie Whyte

University of Central Florida

Kenneth J. Wiant

Tennessee Technological University - Economics, Finance, & Marketing

Lorrie L. Hoffman

Armstrong Atlantic State University

Multiple version iconThere are 2 versions of this paper

Abstract

Studies of the wealth effects of international joint ventures report mixed results. However, little work has been done to explain this enigma. We explain this riddle by identifying the factors which influence the wealth effects. Using a sample of 100 ventures that were announced between 1979 and 1994 we find that, on average, international joint ventures have virtually no immediate net impact on shareholder wealth. However, in-depth analysis reveals interesting findings that could explain why the results of previous studies are mixed. We find that the market reaction is more favorable when U.S. firms establish joint ventures in Asian countries, less favorable when the joint venture is established in lower risk developing countries, and less favorable when the joint venture is a manufacturing operation. In an increasingly globalized world, the results of this study hold important managerial implications.

JEL Classification: F23, G12, G14

Suggested Citation

Borde, Stephen F. and Whyte, Ann Marie and Wiant, Kenneth J. and Hoffman, Lorrie L., New Evidence on Factors that Influence the Wealth Effects of International Joint Venture Announcements. Available at SSRN: https://ssrn.com/abstract=150153

Stephen F. Borde (Contact Author)

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States
407-823-2977 (Phone)
407-823-6676 (Fax)

Ann Marie Whyte

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Kenneth J. Wiant

Tennessee Technological University - Economics, Finance, & Marketing ( email )

Lorrie L. Hoffman

Armstrong Atlantic State University ( email )

11935 Abercorn Street
Savannah, GA 31419
912-927-5317 (Phone)
912-921-2083 (Fax)

HOME PAGE: http://www.armstrong.edu

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