Partner Characteristics, Information Asymmetry, and the Signaling Effects of Joint Ventures
Article first published online: 14 DEC 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 33, Issue 2, pages 127–145, March 2012
How to Cite
Kumar, S. and Park, J. C. (2012), Partner Characteristics, Information Asymmetry, and the Signaling Effects of Joint Ventures. Manage. Decis. Econ., 33: 127–145. doi: 10.1002/mde.2540
- Issue published online: 9 JAN 2012
- Article first published online: 14 DEC 2011
- Manuscript Accepted: 2 NOV 2011
- Manuscript Revised: 8 OCT 2011
- Manuscript Received: 2 AUG 2009
- Joint Ventures;
- Event Studies;
- Transaction Cost Economics
We provide theory and evidence regarding the signaling effects of joint venture (JV) announcements. We argue that when a firm characterized by information asymmetry with respect to the stock market announces a JV, the growth opportunities and the quality of resources of the partner provides a signal to investors about the true value of the firm. Our study shows that (i) apart from synergies, JV announcements impact firm value also because of the information they convey about future growth opportunities; and (ii) JVs may not only validate but also ‘invalidate’ the quality of a firm by revealing that it is unable to attract strong partners. Copyright © 2011 John Wiley & Sons, Ltd.