Joint Venture Investments and the Market Value of the Firm
22 Pages Posted: 14 May 2004
Date Written: January 2004
This paper examines the impact of Joint Venture announcements on the market value of UK listed companies. Based on a sample of 158 announcements of either joint venture formation or joint venture activities, we observe significant positive market-adjusted abnormal returns of 0.5% on the announcement date. Cross-sectional analysis reveals that abnormal returns are significantly lower when undertaken by large companies, or where the project is located in Asia. On the other hand, market-adjusted returns are found to be significantly higher when the project is large compared to the size of the company undertaking the investment, and where the project is either domestic or located within the European Union.
Keywords: Capital Investment, Joint Ventures, Event Study
JEL Classification: G14, G30
Suggested Citation: Suggested Citation