Shareholder Value Effects of Joint Venture Companies in the Amsterdam Stock Exchange

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· 저자명 : 이재웅

초록

Amsterdam Stock Exchange is one of the oldest stock exchange. where the "East India Stockholding Company" was established back in 15th century under Pax Hollandia. Presently, Korea-European Union Free Trade negotiation has been taken place. In case when Korean listed company were made a joint venture agreement with Dutch company and were supposed to be listed in Amsterdam Stock Exchange, the joint venture company is regarded as listed in another EU nation's stock exchange, namely DAX in Germany, etc. Therefore, it is not only beneficial to Korean joint venture company but also Dutch parent company listed in Amsterdam Stock Exchange. This was ‘reason d'etre' of writing this paper.
An investigation on the shareholder value effects of 233 joint venture announcement by Dutch public companies was made in the period of 1987-1998. The study focuses on joint ventures in which the consequences for the shareholders of parents companies are key points. This paper contains the study on the joint venture strategy which has an effect upon the shareholder value with the help of data acquired in the Netherlands.
Event study was performed in accordance with “Fama Methodology." The stock price movement was observed on the basis of public announcement date, which was obtained from Netherlands “Het Finnancieele Dagblad" newspaper. It should be noted that banking and finance industry were excluded from data.
The analysis of the value effect of joint ventures includes only the anomalous part of the market reaction in respect to the parent company share price. The expected returns on the relevant days were estimated by means of the market model approach. The abnormal return(ARit) of a share at time t is calculated as follows:
ARit=Rit-(ai+biRmt)
where: Rit = the effective return of share i at time t
Rmt = the market return at time t
ai = constant term of share i
bi = systematic risk of share i
ai+biRmt = the expected return on share i according the market model

The Decision-Making of Joint Venture is follows:
1)Strategic Content: According to Koh and Venkatraman(1991), Das, Sen and Sengupta(1998), the motives of joint venture decision-making stem from both market and technology development.
2)Strategic Context: It defines the decision-making parameters of environment. Important elements are partner selection, the nationalities and associated cultural differences. Mohanram and Nanda(1998) and Joh and Vendatraman(1991) found that smaller companies gain more excess returns if they enter into alliance with a large partner.
3)Strategic Control: It is the extent to which an enterprise can exert influence on the further development of the joint venture. The ownership structure is as clear manifestation of the degree of influence that a company can exert on the joint venture. Bleek and Ernst(19930 argue that an equal balance of power makes it easier to manage a joint venture and consequently increases the possibility of success. In contrast, Koh and Venkatraman(1991) found that one party having more power within and alliance had a positive effect.

Event Study show that, on average, joint venture announcements have positive impact on the price of the companies involved. This results revealed that positive market reactions were found with significance level of 0.01 for both performance criteria(CAR and SCAR). The CAR is equal to 0.40%. The reaction to joint ventures were both strongly positive(1,77% on average) and negative(-1.34% on average).
Joint venture listed companies in the Amsterdam Stock Exchange during the period of 1987～1988 generated shareholder value effect. Clearly, this results eloquently has shown the negative relationship of Berg and Friedman's(1977) paper.

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