Date of Award

Summer 2007

Document Type


Degree Name

Doctor of Business Administration (DBA)


Economics and Finance

First Advisor

Rebecca Bennett


The importance of strategic alliances in the financial services industry is increasing; however, research focusing on strategic alliances is limited. In this dissertation, I intend to enhance the existing literature by examining the effect of strategic alliances on the value of financial services firms and the level of cooperation between partner firms involved in strategic alliances. The specific objectives of the dissertation are to examine the market reaction to strategic alliance announcements, to examine the preand post-announcement long-run abnormal stock performance and operating performance for the participants of strategic alliances, and to examine joint ventures and mergers and acquisitions after strategic alliances.

I examine a sample of strategic alliances made by financial services firms during the years 1986 to 2003 using various data sources such as the Securities Data Corporation (SDC) database, Center for Research in Security Prices (CRSP), Compustat, and LexisNexis. The results show that the market reacts positively to the announcements of strategic alliances by financial services firms. The announcements of alliances increase the value of partner firms by 0.53%. I find no consistent evidence of abnormal stock performance before or after announcements. The market reaction seems to fully capture the wealth effects associated with strategic alliances. Alliance firms experience an improvement in operating performance before alliance announcements and a deterioration afterwards. The deterioration in operating performance after alliance announcements is driven by the deterioration in industry performance. Strategic alliance firms are more likely to form joint ventures or merge than randomly selected or matched firms. However, joint ventures or mergers and acquisitions are not common after strategic alliances; only about 5% of alliances are followed with joint ventures and mergers with partner firms. Firms often form alliances without expecting this cooperation to become more involved through joint ventures or mergers. The market reacts more favorably to alliance announcements by firms that are subsequently acquired by the alliance partners. The market seems to be able to predict at the time of the alliance announcement which firms have potential for extending their cooperation. I also find that equity alliances and alliances with prior relationships between partners are more likely to be followed by joint ventures or mergers and acquisitions.