Market reaction to business cooperation announcements – evidence from Germany

Schlaefke, M.; Wöhrmann, A.

Zusammenfassung
Joint ventures and other cooperative activities have increased considerably over the last two decades. Yet, there is onlylimited evidence how investors react when such a business cooperation is announced, whereas there is ample evidence formerger and acquisition announcements. Hence, this paper examines share price response to public announcements ofbusiness cooperation in Germany. Unlike previous studies, the present work uses a comprehensive approach and includes awide variety of business cooperation: strategic alliances, formation of joint ventures, project cooperation, public-privatepartnerships and value chain cooperation. Using an event study research design, we investigate a sample of 193announcements of business cooperation issued in the period of 2008-2012 across all industries. We generate evidence thatGerman companies experience significant abnormal returns of 0.61% on the day of announcement. Our results furtherindicate that stock market reactions are associated with managers providing information about the reasons for the businesscooperation. We find that stock market reaction is more positive when a short-term motive for the cooperation is provided.

Schlüsselwörter
business cooperation; event study; abnormal return; cumulative abnormal return