Market reactions to voluntary disclosures of a strategic alliance agreement: evidence from China

Zhang, Xinyue; Li, Wanli; Gao, Simon

Abstract

This paper examines the market reaction to strategic alliance agreements (SAAs), a prevalent yet previously uninvestigated corporate voluntary disclosure practice. We document that investors react positively to SAA disclosures in short windows, and that the effect of SAA disclosures is transitory, since a reversal occurs within 30 days after the disclosure. We also find that the market reaction is weaker to an SAA involving the progress of existing cooperation projects and that markets react more positively to SAAs disclosed by firms that had released progress reports before. The results of cross-sectional tests indicate that investor sophistication and being a high-technology firm strengthen the association between SAA characteristics and market reactions. Finally, we document that market reaction decreased after the passage of the SAA format guidelines in 2015 and after firms have received a comment letter related to an SAA. Overall, our findings indicate that SAA disclosure is a crucial information resource for investors.

Citation

Zhang, X., Li, W., & Gao, S. (2023). Market reactions to voluntary disclosures of a strategic alliance agreement: evidence from China. Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, 52(2), 233-263. https://doi.org/10.1080/02102412.2022.2051322

• Journal Article Type: Article
• Acceptance Date: Mar 7, 2022
• Online Publication Date: Apr 13, 2022
• Publication Date: 2023
• Deposit Date: May 26, 2022
• Journal: Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad
• Print ISSN: 0210-2412
• Electronic ISSN: 2332-0753
• Publisher: Taylor & Francis
• Peer Reviewed: Peer Reviewed
• Volume: 52
• Issue: 2
• Pages: 233-263
• DOI: https://doi.org/10.1080/02102412.2022.2051322
• Keywords: Information preference, market reaction, qualitative information, strategic alliance agreements, regulation, voluntary disclosures
• Public URL: http://researchrepository.napier.ac.uk/Output/2870476