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The impact of M&A and joint ventures on the value of IT and non-IT firms

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Abstract

This paper aims to study and provide empirical evidence on the impact of mergers and acquisitions (M&A) and joint ventures on the value of IT and non-IT firms. Using the event study methodology, we investigate the effect of such strategic alliance announcements on firm value in a sample of 170 firms. The results show that such strategic alliance announcements create significant gains in firm value. When the sample is divided into IT and non-IT firms, we find stronger support for positive impact on gains in firm value among non-IT firms than among IT firms. We also find that the smaller strategic alliance partners perform better than their larger partners. However, we fail to find any significant difference in impact on firm value between merger/acquisition and joint venture announcements.

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Authors and Affiliations

  1. College of Information and Communications, Hanyang University, 17 Haengdang-dong, Seongdong-gu, Seoul, 133-791, Korea

    Sang-Yong Tom Lee

  2. School of Information Technology, Temasek Polytechnic, 21 Tampines Avenue 1, Singapore, 529757

    Kim Seng Lim

Authors
  1. Sang-Yong Tom Lee
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  2. Kim Seng Lim
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Corresponding author

Correspondence to Sang-Yong Tom Lee.

Additional information

This work was supported by the research fund of Hanyang University (HY-2004).

JEL Classification L1 · G14 · G34

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Lee, SY.T., Lim, K.S. The impact of M&A and joint ventures on the value of IT and non-IT firms. Rev Quant Finan Acc 27, 111–123 (2006). https://doi.org/10.1007/s11156-006-8792-5

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  • DOI: https://doi.org/10.1007/s11156-006-8792-5

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