Alliances motive and the stock market response: A comparative analysis across industries

Tewari, Manish; Ramanlal, Pradip Kumar; Kumar, Rajesh; De, Soumendra

doi:10.1080/23311975.2019.1608006

Cited by 6 publications

(17 citation statements)

References 50 publications

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“…The firms are classified according to the motives for which the firms entered into alliances and the industries they belonged to. The categorization based on the motives for the industries is adapted to the analysis reported in Tewari et al, 2019. The evidence presented in Tables 3 through 6 indicate convincingly that multiple alliances are common among firms which engage 6, we obtain the following summary indicating firms which engaged exactly in one and two alliances in Table 7.…”

Section: Distribution Of the Number Of Alliances In Three Subsamples Of Firms Engaging In Multiple Alliancesmentioning

confidence: 92%

“…We assume that gains to explorative alliances will be better explained by the growth options and synergistic benefits variables, and gains to exploitative alliances would correspondingly be better explained by factors representing opportunities for alleviating financial constraints, reducing costs and risks through alliances. A total of eight variables were selected in Tewari et al, (2019), three were expected to explain returns in alliances fueled by the explorative motive and five for the alliances undertaken for the exploitative motive. All of the eight explanatory variables have been used in prior studies.…”

Section: Methodsmentioning

confidence: 99%

“…Prior research on market reactions to announcements of alliances have shown that the average cumulative returns are consistently positive (Tewari et al, 2019). However, valuation implications of multiple alliances crucially depend on the market's perception of the firms' learning process that accumulates over time, the firms' ability to negotiate terms and commit resources to its advantage relative to the target firms and the costs of integration that the partner firms will jointly encounter after the terms of the alliance have been enforced.…”

Section: Hypothesesmentioning

confidence: 99%

“…underlying motivations propelling the participating firms engaging in alliances. Multiple alliances are more likely to be reported in industries wherein the motive for alliance is more exploitative than explorative, whereas the number is likely to be the smallest when the motive is a combination of explorative and exploitative, a scenario that is labeled as the dual motive in Tewari et al, 2019. Alliances fueled by the explorative motive not only have a longer gestational period but also entail more time and resources to execute, implement and assess, requiring thereby more time to plan for the next alliance.…”

Section: Introductionmentioning

confidence: 99%

“…We extend the analysis reported in Tewari et al (2019) and adopt their methodology (a) to ascertain the number of alliances from different industries which will be included in our sample; (b) to preselect a set of variables that will enable us to classify a priori which of the alliances will be classified as either explorative, exploitative or dual motive. Based on this classification, we test hypotheses with regard to the propensity of firms to undertake multiple alliances and analyze the valuation implications for various subsamples of firms which undertook multiple alliances during the time period of the study.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Stock Market Response to Multiple Alliance Announcements

Tewari

Ramanlal²,

Kumar³

et al. 2020

IJFBS

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We document frequency distribution of 4315 two-party, non-equity alliances undertaken by the U.S. based firms between 1986 and 2015 in 11industries and find that on an aggregate basis, the firms which form multiple alliances based on the exploitation motive are as likely to enter into alliance as the firms that enter into multiple alliances based on the exploration motive. However, we find strong evidence that the firms that enter into alliances on three or more occasions are driven by the exploration motive while, the firms that enter into alliances one and one or two times are driven by the exploitation motive. The average cumulative abnormal returns (ACAR) for all of the three subsamples of firms that undertook one, one or two, and three or more alliances during the time period for this study are all positive but exhibit a declining trend. Firms that are larger in terms of total assets engage more frequently in alliances than smaller firms. Returns to firms that enter into three or more alliances are sensitive to the leverage employed and the likelihood of bankruptcy whereas returns to firms that enter into only one or one or two alliances are affected significantly by the considerations of competitive forces.

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Section: Distribution Of the Number Of Alliances In Three Subsamples Of Firms Engaging In Multiple Alliancesmentioning

confidence: 92%

Section: Methodsmentioning

confidence: 99%

Section: Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Stock Market Response to Multiple Alliance Announcements

Tewari

Ramanlal²,

Kumar³

et al. 2020

IJFBS

Self Cite

View full text Add to dashboard Cite

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What determines the performance of pharmaceutical firms in India on account of COVID-19 interventions?

Lamba,

Aggarwal,

Gupta

et al. 2023

IJPHM

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Purpose This paper aims to examine the impact of announcements related to 77 interventions by 46 listed Indian pharmaceutical firms during COVID-19 on the abnormal returns of the firms. The study also finds the variables which explain cumulative abnormal returns (CARs). Design/methodology/approach This study uses standard event methodology to compute the abnormal returns of firms announcing pharmaceutical interventions in 2020 and 2021. Besides this, the multilayer perceptron technique is applied to identify the variables that influence the CARs of the sample firms. Findings The results show the presence of abnormal returns of 0.64% one day before the announcement, indicating information leakage. The multilayer perceptron approach identifies five variables that explain the CARs of the sample companies, which are licensing_age, licensing_size, size, commercialization_age and approval_age. Originality/value The study contributes to the efficient market literature by revealing how firm-specific nonfinancial disclosures affect stock prices, especially in times of crisis like pandemics. Prior research focused on determining the effect of COVID-19 variables on abnormal returns. This is the first research to use artificial neural networks to determine which firm-specific variables and pharmaceutical interventions can influence CARs.

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The role of communication between partners in the process of strategic alliances: a systematic literature review

Jatobá

Franco

Rodrigues³

2022

JBIM

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Purpose The formation of alliances between organisations is increasingly common, allowing firms to discover and ensure competitive advantages. This research paper aims to make a critical analysis of studies to understand the role of communication between partners in the process of strategic alliances. Design/methodology/approach A systematic literature review was carried out, using the Web of Science database to obtain data, associating the terms “communication” and “strategic alliances”, which resulted in 240 scientific articles (published between 1993 and March 2021). After data treatment using VOSviewer software and reading of the contents, the final sample consisted of 179 articles on the subject in question. Findings The conceptual limits, exploratory descriptive analysis of the data and content analysis of research methods are presented, with five clusters being identified. The results show growing academic interest in studying communication associated with strategic alliances, and authors’ main interest lies in understanding the critical success factors and the relation between communication and knowledge. Practical implications This study corroborates understanding of the future of alliances, assuming that learning is the main objective; trust is the factor determining success or failure; technology is the aggregating tool; culture affects the relation; and communication is not an end but a means to construct consolidated, long-lasting and high-performing strategic alliances. Originality/value This study is innovative in strategic alliances area. The research confirms that the main factor in forming alliances, in both emerging and international markets, is the learning intention. This fact reinforces the relevance of the learning made possible by this transfer of know-how through communication. In addition, this study gives critical understanding of how the process of communication between partners in an alliance must be distinct; i.e. it must be flexible enough to adjust to the stage in the alliance’s life cycle.

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Alliances motive and the stock market response: A comparative analysis across industries

Cited by 6 publications

References 50 publications

Stock Market Response to Multiple Alliance Announcements

Stock Market Response to Multiple Alliance Announcements

What determines the performance of pharmaceutical firms in India on account of COVID-19 interventions?

The role of communication between partners in the process of strategic alliances: a systematic literature review

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