Resource Based Theory

The Financial Review 38 (2003) 213--234

Evidence on Value Creation in the Financial
Services Industries through the Use of Joint
Ventures and Strategic Alliances
Kimberly C. Gleason
Bentley College

Ike Mathur∗
Southern Illinois University

Roy A. Wiggins, III
Bentley College

Abstract
While an extensive body of literature has examined merger, acquisition, and consolidation activity in commercial banks and other financial services firms, little attention has been paid to examining how these institutions use the cooperative activities of joint ventures and strategic alliances to accomplish their growth objectives. We analyze the effects of the use of joint ventures and strategic alliances by a sample of firms in the banking, investment services, and insurance industries. Our results show that commercial banks, investment services firms, and insurance companies experience significant abnormal returns of 0.66% on average when they announce their participation in a joint venture or strategic alliance. These abnormal returns are significantly positive across the four strategic motives of domestic, international, horizontal, and diversifying cooperative activities. Using a matched sample, we also show that our sample firms enjoy significant, positive, abnormal returns for holding periods of six, 12, and 18 months after the announcement of the cooperative activity.

∗ Corresponding author: Department of Finance, Southern Illinois University, Carbondale, IL 62901-4626.
Phone: [phone]; Fax: [phone]; E-mail: [e-mail]
The authors thank two anonymous referees, Stephen P. Ferris (the editor), and participants at the 2000
Financial Management Association meeting for helpful comments on earlier drafts of the paper.

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K. C. Gleason et al./The Financial Review 38 (2003) 213–234

Keywords: joint ventures, strategic alliances, long-horizon performance
JEL Classifications: G21/G29/G14

1. Introduction
Financial

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