Alliance Announcement “Surprise” and the Impact on Firm Valuation

James L. Rawlins, Pace University


This study integrated research on strategic alliance formation activity and market signals to examine the impact of alliance announcement history and alliance announcement surprise on firm performance consequences, and then explored the affect of moderator dyads (linked to three of Gulati’s (1998) alliance formation concerns) on the prior alliance announcement/firm performance consequences and the alliance announcement surprise/firm performance consequences relationships. The focus is on non-equity alliances that involve marketing, product development, research, technology transfer, and licensing agreements. The non-equity alliance is the preferred mode of collaboration because it provides a quick way to markets, resources, and capabilities (Kwicinski, 2017), although it lacks the control aspect of ownership found in an equity alliance (Globerman & Nielsen, 2007; Gudergan, 2002; Gulati, 1995b). The research model revealed that abnormal returns, for firms making announcements with no alliance announcement history, were roughly 3× higher in magnitude than the abnormal returns for firms with alliance announcement history. Moreover, abnormal returns for firms that disclosed less than three announcements within a calendar year were 2× to 3× higher than abnormal returns for firms that disclosed three or more announcements within a calendar year. Finally, the combined contributions relating to alliance announcement surprise and prior alliance announcement history offer an interesting new perspective to the alliance formation literature: the notion of alliance announcement cadence.

Subject Area


Recommended Citation

Rawlins, James L., "Alliance Announcement “Surprise” and the Impact on Firm Valuation" (2018). ETD Collection for Pace University. AAI13807746.



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