IDEAS home Printed from https://ideas.repec.org/a/kap/rqfnac/v27y2006i2p111-123.html
   My bibliography  Save this article

The impact of M&A and joint ventures on the value of IT and non-IT firms

Author

Listed:
  • Sang-Yong Lee
  • Kim Lim

Abstract

This paper aims to study and provide empirical evidence on the impact of mergers and acquisitions (M&A) and joint ventures on the value of IT and non-IT firms. Using the event study methodology, we investigate the effect of such strategic alliance announcements on firm value in a sample of 170 firms. The results show that such strategic alliance announcements create significant gains in firm value. When the sample is divided into IT and non-IT firms, we find stronger support for positive impact on gains in firm value among non-IT firms than among IT firms. We also find that the smaller strategic alliance partners perform better than their larger partners. However, we fail to find any significant difference in impact on firm value between merger/acquisition and joint venture announcements. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Sang-Yong Lee & Kim Lim, 2006. "The impact of M&A and joint ventures on the value of IT and non-IT firms," Review of Quantitative Finance and Accounting, Springer, vol. 27(2), pages 111-123, September.
  • Handle: RePEc:kap:rqfnac:v:27:y:2006:i:2:p:111-123
    DOI: 10.1007/s11156-006-8792-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11156-006-8792-5
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11156-006-8792-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jaideep Anand & Harbir Singh, 1997. "Asset Redeployment, Acquisitions And Corporate Strategy In Declining Industries," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 99-118, July.
    2. Brian L. Dos Santos & Ken Peffers & David C. Mauer, 1993. "The Impact of Information Technology Investment Announcements on the Market Value of the Firm," Information Systems Research, INFORMS, vol. 4(1), pages 1-23, March.
    3. John Hagedoorn & Jos Schakenraad, 1994. "The effect of strategic technology alliances on company performance," Strategic Management Journal, Wiley Blackwell, vol. 15(4), pages 291-309, May.
    4. Erik Brynjolfsson & Shinkyu Yang, 1997. "Information Technology and Productivity: A Review of the Literature," Working Paper Series 202, MIT Center for Coordination Science.
    5. Su, Han Chan & Kensinger, John W. & Keown, Arthur J. & Martin, John D., 1997. "Do strategic alliances create value?," Journal of Financial Economics, Elsevier, vol. 46(2), pages 199-221, November.
    6. Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, vol. 31(2), pages 135-175, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mufaddal Baxamusa & Saima Javaid & Khadija Harery, 2015. "Network centrality and mergers," Review of Quantitative Finance and Accounting, Springer, vol. 44(3), pages 393-423, April.
    2. Michael Nippa & Jeffrey J Reuer, 2019. "On the future of international joint venture research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 555-597, June.
    3. Hossain, Mohammed Sawkat, 2021. "Merger & Acquisitions (M&As) as an important strategic vehicle in business: Thematic areas, research avenues & possible suggestions," Journal of Economics and Business, Elsevier, vol. 116(C).
    4. Yasser Alhenawi & Martha Stilwell, 2017. "Value creation and the probability of success in merger and acquisition transactions," Review of Quantitative Finance and Accounting, Springer, vol. 49(4), pages 1041-1085, November.
    5. Thomas Canace & Steven Mann, 2014. "The impact of technology-motivated M&A and joint ventures on the value of IT and non-IT firms: a new examination," Review of Quantitative Finance and Accounting, Springer, vol. 43(2), pages 333-366, August.
    6. Narcyz Roztocki & Heinz Roland Weistroffer, 2015. "Investments in enterprise integration technology: An event study," Information Systems Frontiers, Springer, vol. 17(3), pages 659-672, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Valérie Moatti & Charlotte R. Ren & Jaideep Anand & Pierre Dussauge, 2015. "Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 745-757, May.
    2. Takeda, Fumiko & Takeda, Koichi & Takemura, Toshihiko & Ueda, Ryota, 2021. "The impact of information technology investment announcements on the market value of the Japanese regional banks," Finance Research Letters, Elsevier, vol. 41(C).
    3. Zaheer, Akbar & Castaner, Xavier & Souder, David, 2006. "To integrate or not to integrate ? complementarity, similarity, and acquisition value creation," HEC Research Papers Series 814, HEC Paris.
    4. Drasch, Benedict J. & Schweizer, André & Urbach, Nils, 2018. "Integrating the ‘Troublemakers’: A taxonomy for cooperation between banks and fintechs," Journal of Economics and Business, Elsevier, vol. 100(C), pages 26-42.
    5. Juha-Pekka Kallunki & Elina Pyykkö & Tomi Laamanen, 2009. "Stock Market Valuation, Profitability and R&D Spending of the Firm: The Effect of Technology Mergers and Acquisitions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(7-8), pages 838-862.
    6. Thomas Canace & Steven Mann, 2014. "The impact of technology-motivated M&A and joint ventures on the value of IT and non-IT firms: a new examination," Review of Quantitative Finance and Accounting, Springer, vol. 43(2), pages 333-366, August.
    7. R. Abdul Rahman & R.J. Limmack, 2004. "Corporate Acquisitions and the Operating Performance of Malaysian Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(3‐4), pages 359-400, April.
    8. Anitesh Barua & Deepa Mani, 2018. "Reexamining the Market Value of Information Technology Events," Information Systems Research, INFORMS, vol. 29(1), pages 225-240, March.
    9. Uriel Stettner & Dovev Lavie, 2014. "Ambidexterity under scrutiny: Exploration and exploitation via internal organization, alliances, and acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 1903-1929, December.
    10. Juha‐Pekka Kallunki & Elina Pyykkö & Tomi Laamanen, 2009. "Stock Market Valuation, Profitability and R&D Spending of the Firm: The Effect of Technology Mergers and Acquisitions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(7‐8), pages 838-862, September.
    11. Link, Albert N. & Paton, David & Siegel, Donald S., 2002. "An analysis of policy initiatives to promote strategic research partnerships," Research Policy, Elsevier, vol. 31(8-9), pages 1459-1466, December.
    12. Higgins, Matthew J. & Rodriguez, Daniel, 2006. "The outsourcing of R&D through acquisitions in the pharmaceutical industry," Journal of Financial Economics, Elsevier, vol. 80(2), pages 351-383, May.
    13. Francis Kofi Andoh-Baidoo & Kweku-Muata Osei-Bryson & Kwasi Amoako-Gyampah, 2012. "Effects of firm and IT characteristics on the value of e-commerce initiatives: An inductive theoretical framework," Information Systems Frontiers, Springer, vol. 14(2), pages 237-259, April.
    14. Hanvanich, Sangphet & Richards, Malika & Miller, Stewart R. & Cavusgil, S. Tamer, 2005. "Technology and the effects of cultural differences and task relatedness: A study of shareholder value creation in domestic and international joint ventures," International Business Review, Elsevier, vol. 14(4), pages 397-414, August.
    15. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    16. Fu, Fangjian & Lin, Leming & Officer, Micah S., 2013. "Acquisitions driven by stock overvaluation: Are they good deals?," Journal of Financial Economics, Elsevier, vol. 109(1), pages 24-39.
    17. Ettore Croci, 2007. "Corporate Raiders, Performance and Governance in Europe," European Financial Management, European Financial Management Association, vol. 13(5), pages 949-978, November.
    18. Linda Allen & Julapa Jagtiani & Stavros Peristiani & Anthony Saunders, 2002. "The role of bank advisors in mergers and acquisitions," Staff Reports 143, Federal Reserve Bank of New York.
    19. Blanco Callejo, M, 2007. "LA VENTA DE LA ILUSIÓN Y “LA BRUJA DE ORO”: EL EMBRUJO DE UN CÍRCULO VIRTUOSOi /," Investigaciones Europeas de Dirección y Economía de la Empresa (IEDEE), Academia Europea de Dirección y Economía de la Empresa (AEDEM), vol. 13(3), pages 33-56.
    20. Marc Goergen & Luc Renneboog, 2004. "Shareholder Wealth Effects of European Domestic and Cross‐border Takeover Bids," European Financial Management, European Financial Management Association, vol. 10(1), pages 9-45, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:rqfnac:v:27:y:2006:i:2:p:111-123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.