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Insider trading and the valuation of international strategic alliances in emerging stock markets

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Author Info

  • Stewart R Miller

    (The University of Texas at San Antonio, San Antonio, TX, USA)

  • Dan Li

    (Indiana University, Bloomington, IN, USA)

  • Lorraine Eden

    (Texas A & M University, College Station, TX, USA)

  • Michael A Hitt

    (Texas A & M University, College Station, TX, USA)

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    Abstract

    Because stock markets in emerging economies are relatively new, under-regulated, and often segmented, investors' responses to public announcements by firms in these economies may differ from responses in developed economies' stock markets. We draw on the institutional and corporate governance literatures to explain investor reactions to announcements of international strategic alliances (ISAs) between foreign and emerging-market firms. We argue that emerging economies' stock markets positively value ISAs; however, information leakages due to weak regulatory environments siphon off the “good news” before the ISA announcement date. The level of state ownership of publicly traded firms and the nationality of foreign partners both affect the size and timing of market reactions. Journal of International Business Studies (2008) 39, 102–117. doi:10.1057/palgrave.jibs.8400322

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 39 (2008)
    Issue (Month): 1 (January)
    Pages: 102-117

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    Handle: RePEc:pal:jintbs:v:39:y:2008:i:1:p:102-117

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    Cited by:
    1. Li, Dan & Miller, Stewart R. & Eden, Lorraine & Hitt, Michael A., 2012. "The Impact of Rule of Law on Market Value Creation for Local Alliance Partners in BRIC Countries," Journal of International Management, Elsevier, vol. 18(4), pages 305-321.
    2. Madura, Jeff & Marciniak, Marek, 2014. "Bidder country characteristics and informed trading in U.S. targets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 29(C), pages 256-284.
    3. Barros, Henrique M., 2011. "The Effects of Innovation Partnership, Foreign Ownership and Enhanced Management Practices on the Use of Patents in Brazilian Manufacturing," Insper Working Papers wpe_255, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.

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