Strategic alliances and stock pricing efficiency: Evidence from China

Resource-based theory indicates that participation in strategic alliances is essential for firms to acquire external resources and enhance competitiveness. However, due to data availability constraints, empirical tests regarding the economic consequences of firms' involvement in strategic alliances are limited. Furthermore, the effect of participation in strategic alliances on stock pricing efficiency has not been thoroughly examined. This study manually sorted the announcement information of firms' participation in strategic alliances based on the strategic cooperation and alliance announcements issued by Chinese A-share listed firms from 2016 to 2022. We empirically tested the impact of firm participation in strategic alliances on stock pricing efficiency and its influencing mechanism. We found that firm participation in strategic alliances significantly improved stock price efficiency. The mechanism test indicates that a firm's participation in strategic alliances can effectively enhance information disclosure quality and increase analyst attention to improve stock pricing efficiency. Further analysis indicates that a firm's participation in strategic alliances effectively produced a “learning effect.” The greater the number of alliance partners, the more frequent the alliances, and the longer the duration of the alliances, the more significant the improvement in stock pricing efficiency for firms. From the perspective of geographical location, strategic alliances have a more pronounced effect on improving stock pricing efficiency in firms in a low capital market development areas than those in a high market development areas. The findings may provide a reference for the capital market to aid the development of the real economy and firms in making strategic alliance decisions.