Title
Tobin's q, Agency Conflicts, and Differential Wealth Effects of International Joint Ventures
Document Type
Article
Publication Date
9-1-2001
Description
This article examines announcement effects of 240 international joint ventures (IJVs) undertaken by US firms to ascertain their impact on shareholders' wealth. The objective is to ascertain whether the mixed results of announcement effects reported in the literature can be explained. Theory suggests that IJVs would result in differential stock price reactions due to firm-specific characteristics. Therefore, it is hypothesized that IJVs would elicit a positive stock price reaction, on average. Also, it is hypothesized that this reaction should be greater for high Tobin's q firms and for low free cash flow firms. Empirical analysis reveals that firm-specific characteristics do influence announcement effects and suggests that these factors may explain the mixed announcement effects documented in the literature.
Citation Information
Min, Jae Hoon; and Prather, Larry J.. 2001. Tobin's q, Agency Conflicts, and Differential Wealth Effects of International Joint Ventures. Global Finance Journal. Vol.12(2). 267-283. https://doi.org/10.1016/S1044-0283(01)00032-1 ISSN: 1044-0283