IVS Seminar

Seminar with Mikkel Lucas Overby and Serden Özcan.

PhD Fellows. Department of Informatics, Copenhagen Business School, and Department of Industrial Economics & Strategy, Copenhagen Business School, respectively.

“Partner diversity and shareholder value: A study of high-tech multifirm alliances”

Abstract:

Alliances play a central role for firm value. This paper investigates how a firm’s diversity with its alliance partners affects its abnormal stock market return following an announcement of a high-tech multifirm alliance. We present four theoretically grounded competing hypotheses on the relationship: (1) the relationship is positive; (2) the relationship is negative; (3) the relationship is U-shaped; and (4) the relationship is an inverted U-shape. To test the hypotheses we introduce two measures of diversity: resource-based diversity and industry-based diversity. We use event study methodology to address stock market reactions to 172 (266 observations) multifirm alliance announcements over a five-year period (2000-2004). Our results demonstrate a U-shaped relationship between abnormal stock market returns and the degree of diversity between a firm and its alliance partners. Implications for theory and practice are discussed.

No registration is required. All are welcome.