Business alliances – a study of abnormal returns in the Nordic stock market
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School of Business |
Master's thesis
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Authors
Date
2019
Department
Major/Subject
Mcode
Degree programme
Finance
Language
en
Pages
87 + 6
Series
Abstract
My study examines 1264 business alliance announcements made by public companies in the Nordic stock market during 2000-2018 to evaluate whether such announcements generally produce abnormal stock market returns for the announcing firms. My study also assesses the types of business alliance announcements that produce the most significant abnormal effect on the stock price in the Nordics. The analysis is conducted with event study methodology including three different estimation models for increased statistical robustness. My results show that business alliances, both joint ventures and strategic alliances, generate a statistically significant cumulative average abnormal return of 1.40% during a three-day announcement period consisting of the day before the announcement, the announcement date, and the day after the announcement. The positive market reaction is most prominent in small cap firms as they produce a significant 5.74% cumulative average abnormal return during the three-day announcement period which is significantly higher than the 0.20% produced by large cap firms. However, I am generally unable to find other significant differences between the cumulative average abnormal returns between specific business alliance types although I find some evidence of business alliances with foreign partners outperforming alliances with domestic partners and high-technology business alliances underperforming compared to other alliances in the Nordic stock market.Description
Thesis advisor
Nyberg, PeterKeywords
business alliances, joint ventures, strategic alliances, event study, Nordic stock market