Advertisement

Journal of Business Economics

, Volume 83, Issue 6, pp 605–630 | Cite as

Valuation effects of corporate strategic transactions in the cleantech industry

  • Houdou Basse-MamaEmail author
  • Nicolas Koch
  • Alexander Bassen
  • Theo Bank
Original Paper

Abstract

This paper investigates capital market reactions to announcements of corporate strategic transactions in the clean technology, or cleantech, industry. Using the event study method in a multi-country setting, we exploit a dataset of 328 hand-collected announcements of mergers and acquisitions, joint ventures, and asset disposals that took place between 2001 and 2011. We provide strong evidence of significant wealth gains from cleantech deals. On average, cleantech companies earn significantly higher abnormal returns than non-cleantech companies, confirming the beneficial idiosyncrasies of the cleantech industry. These high premia are likely driven by government interventions that are believed to be a necessary pre-condition for development of clean technology. Alternatively, the premia are commanded by the acquisition of cutting-edge environmental innovations and the positive credibility spillover inherent in cleantech deals.

Keywords

Cleantech Renewable energy Mergers and acquisitions Event study 

JEL classification

G14 Q28 Q42 

References

  1. Ambec S, Paul L (2008) Does it pay to be green? A systematic overview. Acad Manage Perspect 22(4):45–62CrossRefGoogle Scholar
  2. BNEF, Bloomberg New Energy Finance (2010) Subsidies for renewables, biofuels dwarfed by supports for fossil fuels. http://bnef.com/PressReleases/view/123. Accessed 10 April 2011
  3. Boehmer E, Musumeci J, Poulsen AB (1991) Event study methodology under conditions of event induced variance. J Financ Econ 30(2):253–272CrossRefGoogle Scholar
  4. Bradley M, Desai A, Kim EH (1983) The rationale behind interfirm tender offers: information or synergy? J Financ Econ 11(1–4):183–206CrossRefGoogle Scholar
  5. Brown SJ, Warner JB (1985) Using daily stock returns: the case of event studies. J Financ Econ 14(1):3–31CrossRefGoogle Scholar
  6. Bruner RF (2002) Does M&A pay? A survey of evidence for the decision-maker. J Appl Finance 12(1):48–69Google Scholar
  7. Bürer MJ, Wüstenhagen R (2009) Which renewable energy policy is a venture capitalist’s best friend? Empirical evidence from a survey of international cleantech investors. Energy Policy 37(12):4997–5006CrossRefGoogle Scholar
  8. Campa JM, Hernando I (2004) Shareholder value creation in European M and As. Eur Financial Manage 10(1):47–81CrossRefGoogle Scholar
  9. Campart S, Pfister E (2007) Technology, cooperation and stock market value: an event study of new partnership announcements in the biotechnology and pharmaceutical industries. Econ Innovat New Technol 16(1):31–49CrossRefGoogle Scholar
  10. Campbell CJ, Cowan AR, Salotti V (2010) Multi-country event study methods. J Bank Finance 34(12):3078–3090CrossRefGoogle Scholar
  11. Chang S (1998) Takeovers of privately held targets, methods of payment, and bidder returns. J Finance 53(2):773–784CrossRefGoogle Scholar
  12. Datta DK, Pinches GE, Narayanan VK (1992) Factors influencing wealth creation from mergers and acquisitions: a meta-analysis. Strateg Manag J 13(1):67–84CrossRefGoogle Scholar
  13. Denning KC, Hulburt H, Ferris SP (2006) Risk and wealth effects of U.S. firm joint venture activity. Rev Financial Econ 15:271–285CrossRefGoogle Scholar
  14. EC, European Commission (2008) The support of electricity from renewable energy sources—Accompanying document to the proposal for a directive of the European parliament and of the council on the promotion of the use of energy from renewable sources. Commission Staff Working Document SEC 57Google Scholar
  15. EC, European Commission (2011): Communication from the commission to the European parliament and the council—Renewable energy: Progressing towards the 2020 target. COM 31Google Scholar
  16. Ecofys, Frauenhofer ISI, TU Vienna EEG, Ernst and Young (2011) Financing renewable energy in the European energy market. http://ec.europa.eu/energy/renewables/studies/renewables_en.htm. Accessed 10 April 2011
  17. First Solar (2011) Clean. Affordable. Sustainable—Quick facts and figures. http://www.firstsolar.com/en/about.php. Accessed 15 April 2011
  18. Gleason KC, Mathur I, Wiggins III RA (2006) The evidence on product-market diversifying acquisitions and joint ventures by U.S. banks. J Financial Serv Res 29(3):237–254Google Scholar
  19. Gugler KP, Siebert R (2007) Market power versus efficiency effects of mergers and research joint ventures: evidence from the semiconductor industry. Rev Econ Stat 89(4):645–659CrossRefGoogle Scholar
  20. Gugler KP, Mueller DC, Weichselbaumer M, Yurtoglu BB (2012) Market optimism and merger waves. Manag Decis Econ 33(3):159–175CrossRefGoogle Scholar
  21. Hennart J-F, Reddy S (1997) The choice between mergers/acquisitions and joint ventures: the case of Japanese investors in the united states. Strateg Manag J 18:1–12CrossRefGoogle Scholar
  22. Henriques I, Sadorsky P (2008) Oil prices and the stock prices of alternative energy companies. Energy Econ 30:998–1010CrossRefGoogle Scholar
  23. Hockerts K, Wüstenhagen R (2010) Greening goliaths versus emerging davids—Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship. J Bus Ventur 25:481–492CrossRefGoogle Scholar
  24. Ince OS, Porter RB (2006) Individual equity return data from Thomson Datastream: handle with care! J Financial Res 29(4):463–479CrossRefGoogle Scholar
  25. IPCC, Intergovernmental Panel on Climate Change (2007) Climate change 2007: The physical science basis: Summary for policy makers. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  26. IPCC, Intergovernmental Panel on Climate Change (2011) Special report renewable energy sources and climate change mitigation—Summary for policymakers, Working Group III. Cambridge University Press, CambridgeGoogle Scholar
  27. Jarell GA, Brickley JA (1980) Netter JM (1988): the market for corporate control: the empirical evidence since. J Econ Perspect 2(1):49–68Google Scholar
  28. Jensen MC, Ruback RS (1983) The market for corporate control, the scientific evidence. J Financ Econ 11:5–50CrossRefGoogle Scholar
  29. Johnson SA, Houston MB (2000) A reexamination of the motives and gains in joint ventures. J Financ Quant Anal 35(1):67–85CrossRefGoogle Scholar
  30. Knight E (2012) The economic geography of financing clean energy technologies. Compet Change 16(2):77–90CrossRefGoogle Scholar
  31. Lee S-YT, Lim KS (2006) The impact of M&A and joint ventures on the value of it and non-it firms. Rev Quant Financ Acc 27(2):111–123CrossRefGoogle Scholar
  32. Luo Y (2005) Do insiders learn from outsiders? Evidence from mergers and acquisitions. J Financ 60:1951–1982CrossRefGoogle Scholar
  33. Masini A, Menichetti E (2010) The impact of behavioural factors in the renewable energy investment decision making process: conceptual framework and empirical findings. Energy Policy 40:28–38CrossRefGoogle Scholar
  34. McConnell JJ, Nantell TJ (1985) Corporate combinations and common stock returns: the case of joint venture. J Financ 40(2):519–536CrossRefGoogle Scholar
  35. Mueller DC (2003) The finance literature on mergers: A critical survey. In: Waterson M (ed) Competition. Monopoly and Corporate Governance. Essays in Honour of Keith Cowling, Edward Elgar, Cheltenham, pp 161–205Google Scholar
  36. Ng AW (2011) Technology collaboration for cross-border technology transfer. Cases of clean tech ventures from China. Tech Monitor Sep–Oct:20–25Google Scholar
  37. Oberndorfer U, Ziegler A (2006) Environmentally oriented energy policy and stock returns: An empirical analysis. ZEW Discussion Paper 06–079Google Scholar
  38. Pew (2010) Who’s winning the clean energy race? Growth, competition and opportunity in the world’s largest economies. http://www.pewtrusts.org/our_work_detail.aspx?id=692. Accessed 10 April 2011
  39. PwC, PricewaterhouseCoopers (2009) Renewable deals: 2008 annual review. http://www.pwc.com/renewables. Accessed 2 November 2012
  40. PwC, PricewaterhouseCoopers (2011) Renewable deals: 2010 analysis and 2011 foresight. http://www.pwc.com/renewables. Accessed 2 November 2012
  41. PwC, PricewaterhouseCoopers (2012) Renewable deals: 2012 outlook and 2011 review. http://www.pwc.com/renewables. Accessed 2 November 2012
  42. Sadorsky P (2012) Modeling renewable energy company risk. Energy Policy 40:39–48CrossRefGoogle Scholar
  43. Sawler J (2005) Horizontal alliances and the merger paradox. Manag Decis Econ 26(4):243–248CrossRefGoogle Scholar
  44. Schipper K, Thompson R (1983) The impact of merger-related regulations on the shareholders of acquiring firms. J Account Res 21(1):184–221CrossRefGoogle Scholar
  45. Scholes M, Williams J (1977) Estimating betas from nonsynchronous data. J Financ Econ 5(3):309–327CrossRefGoogle Scholar
  46. Shelton LM (1988) Strategic business fits and corporate acquisition: Empirical evidence. Strategic Manage J 9(3):279–287CrossRefGoogle Scholar
  47. Shleifer A, Vishny RW (2003) Stock market driven acquisitions. J Financ Econ 70(3):295–311CrossRefGoogle Scholar
  48. Suntech (2011) A global solar leader addressing the 21st century’s energy challenge http://eu.suntech-power.com/en/about/about-suntech.html. Accessed 15 April 2011
  49. The Economist (2010) Global mergers and acquisitions. http://www.economist.com/node/16486667?story_id=16486667. Accessed 17 May 2011
  50. UNEP, United Nations Environment Programme (2010) Global trends in sustainable energy investment 2010 report. http://sefi.unep.org/english/globaltrends2010.html. Accessed 15 April 2011
  51. Verrecchia R (1983) Discretionary disclosure. J Account Econ 5:179–194CrossRefGoogle Scholar
  52. Vestas (2011) From country blacksmith to modern explorer. http://www.vestas.com/en/about-vestas/history.aspx. Accessed 6 June 2011
  53. Welt AS (2011) National security review of renewable energy and cleantech transactions. http://ssrn.com/abstract=1933285. Accessed 25 October 2012
  54. White H (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48(4):817–838Google Scholar
  55. Wiser RH, Pickle SJ (1998) Financing investments in renewable energy: the impacts of policy design. Renew Sustain Energy Rev 2:361–386CrossRefGoogle Scholar
  56. WEF, World Economic Forum (2010) Green investing 2010 policy mechanisms to bridge the financing gap. http://www.weforum.org/reports/green-investing-2010-policy-mechanisms-bridge-financing-gap. Accessed 15 October 2012
  57. WEF, World Economic Forum (2011) Green investing 2011. Reducing the cost of financing. http://www.weforum.org/reports/green-investing-2011. Accessed 15 October 2012
  58. Wüstenhagen R, Menichetti E (2011) Strategic choices for renewable energy investment: conceptual framework and opportunities for further research. Energy Policy 40:1–10CrossRefGoogle Scholar
  59. York JG, Venkataraman S (2010) The entrepreneur–environment nexus: uncertainty, innovation, and allocation. J Bus Ventur 25:449–463CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Houdou Basse-Mama
    • 1
    Email author
  • Nicolas Koch
    • 2
  • Alexander Bassen
    • 2
  • Theo Bank
    • 3
  1. 1.ESCP Europe Business School Berlin, Chair of International Financial MarketsBerlinGermany
  2. 2.University of Hamburg, School of Business, Economics and Social Sciences, Chair of Capital Markets and ManagementHamburgGermany
  3. 3.The Boston Consulting Group GmbH, Chilehaus AHamburgGermany

Personalised recommendations