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The impacts of economic importance difference of a joint venture (JV) held by partners and partners' size difference on the extraction of rivalrous and non-rivalrous private benefits in a JV

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  • Zhang, Xiaoxiang
  • Wen, Jie

Abstract

We investigate the impacts of economic importance difference of a JV held by partners and partners' size difference on the extraction of rivalrous and non-rivalrous private benefits in a JV. Focusing on 824 JV events during the period 2001–2012 in the global markets we find that, where the economic importance difference of a JV held by partners is large, a partner with a more economically important JV extracts more rivalrous type and non-rivalrous type of private benefits. Under the situation where partners' size difference is large, a smaller partner extracts more non-rivalrous type of private benefits. Whether arbitrage trading between two partners' shares outperforms the trading strategy of buy-hold two partners' shares during the JV announcement period depends on whether there are large private benefits available or not.

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  • Zhang, Xiaoxiang & Wen, Jie, 2016. "The impacts of economic importance difference of a joint venture (JV) held by partners and partners' size difference on the extraction of rivalrous and non-rivalrous private benefits in a JV," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 46-54.
    • Handle: RePEc:eee:finana:v:48:y:2016:i:c:p:46-54
    DOI: 10.1016/j.irfa.2016.09.005
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