The impact of strategic alliances on the market value of telecommunications firms

The impact of 5G multi‐access edge computing cooperation announcement on the telecom operators' firm value

“…Elmuti and Kathawala [16] explained that the aims of a strategic alliance are to use such an alliance as a growth strategy, to enter a new market, to share risks and costs of R&D, or to achieve or secure strategic advantages effectively. Cuéllar-Fern andez and others [13] summarized previous studies indicating that the benefits of a strategic alliance include the potential for creating value by accessing new resources, the reduced transaction costs by acquiring the capabilities enabling rapid and flexible response to change in the demand and structure of the industry, and the secure guarantee for third parties, especially in the case of small firms. If these benefits of strategic alliances are expected to affect the firm's present and future cash flow positively, the announcement of a strategic alliance will have a positive impact on the firm's stock price [13].…”

“…Cuéllar-Fern andez and others [13] summarized previous studies indicating that the benefits of a strategic alliance include the potential for creating value by accessing new resources, the reduced transaction costs by acquiring the capabilities enabling rapid and flexible response to change in the demand and structure of the industry, and the secure guarantee for third parties, especially in the case of small firms. If these benefits of strategic alliances are expected to affect the firm's present and future cash flow positively, the announcement of a strategic alliance will have a positive impact on the firm's stock price [13]. In this regard, previous studies empirically showed that a strategic alliance announcement has a positive impact on the firm value [14,15,[17][18][19][20].…”

“…Considering the general purposes of a strategic alliance, mentioned by other studies [13][14][15][16], the purposes of taking part in 5G MEC alliances between telecom operators might be to enter a new market (such as B2B vertical markets), share the risks and costs of R&D related to 5G MEC, and/or secure reliability in cloud computing where telecom operators have a lack of expertise compared with global partners. 5G MEC cooperations can be classified as a technological alliance because the aim of such an alliance is the development and testing of MEC technologies and/or solutions in general.…”

“…This study used the event study methodology for capturing the impact of a 5G MEC cooperation announcement on the telecom operators' firm value. This methodology has been widely used in previous studies for measuring the impact of events on firm value in the telecommunication industry [10,11] and the impact of strategic alliances announcements on firm value [12,13]. This study also conducted a regression analysis to investigate the combined effect of a coopetitive relationship and innovation uncertainty on the impacts of the 5G MEC cooperation announcement.…”

Impact of Geopolitical Risk on the Information Technology, Communication Services and Consumer Staples Sectors of the S&P 500 Index

“…Apart from geopolitical risk, other types of risk are also known to impact the stock return of firms. Examples of other risks include risk from the financial crises (such as recession (BenMim and BenSaïda 2019), banking crises (Miyajima and Yafeh 2007)), risk due to government policy and regulatory decisions (Grout and Zalewska 2006;Lamdin 2001;Jeon et al 2020), risk due to natural disasters and climate/weather change (Atems et al 2020;Bourdeau-Brien and Kryzanowski 2017), risk from political fallouts (Buigut and Kapar 2019), risk as a result of the occurrence of infectious diseases such as COVID-19 and SARs (Mazura et al 2020;Chen et al 2007;Bai et al 2020;Kim et al 2020), risk due to M&A/joint ventures (Hanvanich and Çavuşgil 2001;Koh and Venkatraman 1991;Park et al 2002;Dranev et al 2019;Cuéllar-Fernández et al 2011), risk due to industrial chemical accidents (Makino 2016), disruption of goods or services in the supply chain (Chen et al 2019), announcements (Dobija et al 2012;Hanvanich and Çavuşgil 2001;Jeon et al 2020), trading of gold and oil market futures (Junttila et al 2018), trading on the U.S. dollar (the U.S. reserve currency) (Kocaarslan and Soytas 2019), IT infrastructure changes (Wagener et al 2010), food safety events (Seo et al 2013), etc. Caldara and Iacoviello (2018) have developed a geopolitical risk index which measures the fluctuations in geopolitical risk over a given period of time, and we intend to further explore geopolitical risk using this index in order to forecast the impact of this specific risk (GPR) on stock returns of the S&P 500 index.…”