Joint Venture Investments and the Market Value of the Firm

22 Pages Posted: 14 May 2004

See all articles by Edward A.E. Jones

Edward A.E. Jones

Heriot-Watt University, Edinburgh

Jo Danbolt

University of Edinburgh Business School

Date Written: January 2004

Abstract

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

Jones, Edward A.E. and Danbolt, Jo, Joint Venture Investments and the Market Value of the Firm (January 2004). Available at SSRN: https://ssrn.com/abstract=485668 or http://dx.doi.org/10.2139/ssrn.485668

Edward A.E. Jones

Heriot-Watt University, Edinburgh ( email )

School of Management and Languages
Edinburgh EH14 4AS, Scotland
United Kingdom

Jo Danbolt (Contact Author)

University of Edinburgh Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

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