Premium
The Value of Strategic Alliances in Acquisitions and IPOs
Author(s) -
Qi Jianping,
Sutton Ni K.,
Zheng Qiancheng
Publication year - 2015
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12040
Subject(s) - alliance , initial public offering , business , value (mathematics) , strategic alliance , marketing , industrial organization , value creation , accounting , machine learning , political science , computer science , law
This paper investigates how firms’ strategic alliance experience affects their valuations as acquisition targets or in initial public offerings (IPOs). We propose that alliance experience serves as a valuable signaling device for opaque firms. The results show that takeover targets with alliance experience receive higher premiums than those without such experience. More recent alliance experience as well as alliances in the same industry also contributes to a larger target gain. Similarly, IPO firms that have alliance experience obtain higher valuations than those without the experience. Finally, alliance experience increases the likelihood that private firms exit by going public rather than being acquired.