IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v35y2000i01p67-85_00.html
   My bibliography  Save this article

A Rexamination of the Motives and Gains in Joint Ventures

Author

Listed:
  • Johnson, Shane A.
  • Houston, Mark B.

Abstract

We distinguish between horizontal and vertical joint ventures, and find correspondingly different valuation effects. Horizontal joint ventures create synergistic gains that are shared by the partners. In contrast, vertical joint ventures generate gains only for suppliers. This is similar to the patter we find for simple contracts, which suggests economic similiarities between vertical joint ventures and contracts. Analysing firms' choices between these contracting options, we find that firms choose vertical joint ventures over simple contracts when potential hold-up problems are severe and when suppliers face finance constraints. The results d not support a risk-sharing motive for joint ventures.

Suggested Citation

  • Johnson, Shane A. & Houston, Mark B., 2000. "A Rexamination of the Motives and Gains in Joint Ventures," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(01), pages 67-85, March.
  • Handle: RePEc:cup:jfinqa:v:35:y:2000:i:01:p:67-85_00
    as

    Download full text from publisher

    File URL: http://journals.cambridge.org/abstract_S0022109000009091
    File Function: link to article abstract page
    Download Restriction: no

    Citations

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


    Cited by:

    1. Shyam Kumar, M.V., 2007. "Asymmetric wealth gains in joint ventures: Theory and evidence," Finance Research Letters, Elsevier, vol. 4(1), pages 19-27, March.
    2. Owen, Sian & Yawson, Alfred, 2015. "R&D intensity, cross-border strategic alliances, and valuation effects," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 35(C), pages 1-17.
    3. Chen, Jun & King, Tao-Hsien Dolly & Wen, Min-Ming, 2015. "Do joint ventures and strategic alliances create value for bondholders?," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 247-267.
    4. Kimberly Gleason & Ike Mathur & Roy Wiggins, 2006. "The Evidence on Product-Market Diversifying Acquisitions and Joint Ventures by U.S. Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 29(3), pages 237-254, June.
    5. 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.
    6. Mantecon, Tomas & Liu, Ian & Gao, Fei, 2012. "Empirical evidence of the value of monitoring in joint ownership," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1045-1056.
    7. Boone, Audra L. & Ivanov, Vladimir I., 2012. "Bankruptcy spillover effects on strategic alliance partners," Journal of Financial Economics, Elsevier, vol. 103(3), pages 551-569.
    8. Georgieva, Dobrina & Jandik, Tomas & Lee, Wayne Y., 2012. "The impact of laws, regulations, and culture on cross-border joint ventures," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 774-795.
    9. Bruce Burton, 2005. "Concurrent capital expenditure and the stock market reaction to corporate alliance announcements," Applied Financial Economics, Taylor & Francis Journals, vol. 15(10), pages 715-729.
    10. Habib, Michel A. & Mella-Barral, Pierre, 2013. "Skills, core capabilities, and the choice between merging, allying, and trading assets," Journal of Mathematical Economics, Elsevier, vol. 49(1), pages 31-48.
    11. Edward Jones & Jo Danbolt & Ian Hirst, 2004. "Company investment announcements and the market value of the firm," The European Journal of Finance, Taylor & Francis Journals, vol. 10(5), pages 437-452.
    12. HEGE, Ulrich & HAUSWALD, Robert, 2002. "Ownership and control in joint ventures: theory and evidence," Les Cahiers de Recherche 750, HEC Paris.
    13. Chou, Ting-Kai & Ou, Chin-Shyh & Tsai, Shu-Huan, 2014. "Value of strategic alliances: Evidence from the bond market," Journal of Banking & Finance, Elsevier, vol. 42(C), pages 42-59.
    14. Fich, Eliezer M. & Starks, Laura T. & Yore, Adam S., 2014. "CEO deal-making activities and compensation," Journal of Financial Economics, Elsevier, vol. 114(3), pages 471-492.
    15. Bodnaruk, Andriy & Massa, Massimo & Simonov, Andrei, 2013. "Alliances and corporate governance," Journal of Financial Economics, Elsevier, vol. 107(3), pages 671-693.
    16. Edward Jones & Jo Danbolt, 2004. "Joint venture investments and the market value of the firm," Applied Financial Economics, Taylor & Francis Journals, vol. 14(18), pages 1325-1331.
    17. 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.
    18. repec:eee:finana:v:52:y:2017:i:c:p:190-202 is not listed on IDEAS
    19. Neubecker, Leslie, 2003. "Does cooperation in manufactoring foster tacit collusion," Tübinger Diskussionsbeiträge 261, University of Tübingen, School of Business and Economics.

    More about this item

    Statistics

    Access and download statistics

    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:cup:jfinqa:v:35:y:2000:i:01:p:67-85_00. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: http://journals.cambridge.org/jid_JFQ .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.