The impact of strategic alliances on the market value of telecommunications firms

摘要

This paper analyzes the impact of 130 strategic alliance announcements involving European telecommunications firms on capital markets. We use the event study methodology. We define the event as the public announcement of an alliance initiative by a firm in the media. Specifically, the data was collected from alliance-related news items posted in the Press Release pages in corporate websites. Our findings indicate that investors appreciate the importance of alliance initiatives by European telecommunications firms, and this is reflected in their effect on the volatility of share prices surrounding announcement date. In view of the null effect of alliances on returns, however, it would seem that the expectations generated in the market are mixed. On considering the influence of firm-specific characteristics on the effects of alliances disclosure in capital markets, our results show that in young companies, with a smaller size, less profitable, and with growth perspectives more uncertain, the effect of announcements of alliances is negative. Comparison of our results with the evidence for the US market reveals a smaller reaction in European markets which could be explained by both differences in the legislative, economic and social environment and the specific features of the firms operating in the two markets.