ارزش اتحاد استراتژیک: شواهدی از بازار اوراق قرضه

The objective of this study is to examine the relationship between strategic alliances and the cost of debt, proxied by the at-issue yield spread of bond offerings. We hypothesize that the participation of strategic alliances lowers a firm’s cost of debt because it improves the level and stability of future profit streams and reduces information asymmetry among investors. Based on 2,150 bond-issuing firms during the period 1985–2009, we find evidence consistent with this argument. Furthermore, we find that the mitigating effect of strategic alliances on the debt cost is much more pronounced for firms with higher product market competition, more severe financial constraints, and greater R&D investments. Taken together, this is the first paper to examine the importance of strategic alliances in the bond market and our results highlight that corporate alliance activity is valued outside the equity market and creates additional benefits that result in lower cost of debt financing.

Recently, inter-organizational strategic alliance activities have drawn increased interest from business and finance practitioners, as well as from academicians. Strategic alliances refer to collaborative partnerships between allying firms that pool together subsets of their own resources to achieve a common set of mutually beneficial objectives (Gulati and Singh, 1998 and Baker et al., 2002). Thus, firms can access, exchange, or internalize valuable resources, both technological and financial, through strategic alliances. A recent review paper by Wassmer (2010) indicates that most of the research on alliances has focused on the emergence, management, and survival of alliances. There is little research on the effect of alliances on the cost of external capital. This paper aims to fill this gap in the literature by analyzing whether strategic alliances can reduce the cost of debt financing. Furthermore, we examine the differential effect of alliances conditional on product market competition, financial constraints, and the technological intensity of allying firms. With global competition and increasing uncertainty and complexity in the business environment, single firms seldom possess all the strategically critical resources required to sustain and grow their businesses. Building alliance portfolios has been seen as an effective means of dealing with these problems and achieving competitive advantages for the parties involved. In the most recent decades, strategic alliances have grown dramatically (Powell et al., 1996, Larsson et al., 1998 and Ireland et al., 2002). Dyer et al. (2004), for example, reports that U.S. companies entered into 57,000 alliances from 1996 through 2001 and more than 5,000 alliances were formed each year in 2002 and 2003. Indeed, anecdotal evidence suggests that nearly 6% of Fortune 1000 companies’ revenues are generated from inter-organizational alliances (The Daily Deal, October 8, 2001) 1. A 1997 survey by Coopers & Lybrand also reveals that firms engaging in strategic alliances have 11% higher revenue and a 20% higher growth rate than ones without alliances. The prevalence of corporate alliance activity, with the objective of building cooperative advantages, has motivated researchers to investigate the valuation implications of strategic alliances. Specifically, some studies have examined the impact of alliance announcement on the stock market valuation of allying firms. The empirical evidence on equity market value is, however, mixed. For example, Chan et al. (1997) and Anand and Khanna (2000) report that firms enjoy significant positive abnormal returns following alliance announcements, suggesting that stockholders perceive strategic alliances to be beneficial to firm value. In contrast, Das et al. (1998) find an insignificant market reaction to such announcements and imply that the benefits of strategic alliances may be offset by their costs.2 In sum, whether strategic alliances really bring about (net) benefits might not be as obvious as originally thought and needs to be further investigated. This paper takes a different view and assesses the merits of strategic alliances from the perspective of bondholders. If bondholders value corporate alliance activity, they will be willing to sacrifice a portion of their required return on firms participating in strategic alliances. The theoretical underpinnings predicting a negative association between strategic alliances and the cost of debt financing follow two related thrusts. Grounded in transaction cost theory and resource-based theory, the first is that strategic alliances enhance the level and stability of firms’ future profit streams and thus lower the cost of debt. This stream of research includes work by Zahra and Bogner, 1999 and Vickery et al., 2003, and Lerner and Rajan (2006). Predicated on signaling theory, the second stream of research, which includes Stuart et al., 1999 and Nicholson et al., 2005, and Ivanov and Lewis (2008), suggests that strategic alliances can alleviate the information asymmetry problem among investors through external alliance partners serving to signal firm value and quality. We focus on the bond setting for several reasons. First, bondholders represent the single largest set of capital providers for most firms and bond securities make up a significant portion of a typical firm’s market capitalization. In doing so, we gain new insights into how strategic alliances could indirectly affect firm value through debt financing. Second, the bond market allows for cleaner inferences when compared to the equity market. Klock et al. (2005) argue that because bonds have precise payouts and shorter durations, their prices are more accurate and less subject to the criticism that the results are driven by misspecification of the equilibrium asset pricing model than are equity prices. Third, bondholders differ from stockholders in many aspects; in particular, they are more concerned with risk, or the lower tail of the probability distribution of outcomes. As a result, our study on the importance of corporate alliance activity in the bond market adds complementary knowledge to prior research based on equity markets. Using a sample of 2,150 bond-issuing firms during the period from 1985 to 2009, we find evidence that participation in strategic alliances is associated with a lower cost of debt financing. Multiple regression analysis reveals that this negative association is robust to controlling for firm- and issue-specific characteristics, as well as macroeconomic conditions. We also find that the effect of strategic alliances on the debt cost is much more pronounced for firms with higher product market competition, tighter financial constraints, and more R&D investments because the volatility of future profit streams and value uncertainty is higher for such firms and thus the marginal benefit of strategic alliances is greater. That is, our results suggest that strategic alliances appear to mitigate the adverse effects of inferior business environment on the cost of debt financing. To gain further insight into the reducing effect of strategic alliances on the cost of debt, we conduct several additional analyses. First, some firms issue multiple bonds and we find that for consecutive bond issues from the same firm, our measure of the debt cost decreases across time as firms change status from not participating to participating in strategic alliances. Second, the reduction in the cost of debt is related not only to the alliance participation activity, but also to allying firms’ past alliance experience. Third, the observed effect of strategic alliances appears to be due to a larger extent to technology alliances relative to marketing alliances. Fourth, we find that participation in equity-based joint ventures and participation in contractual alliances are both associated with a lower cost of debt. Fifth, the mitigating effect of strategic alliances on the cost of debt is more dramatic for small firms than for large firms. Sixth, we verify that our results are robust to various techniques used to deal with potential endogeneity concerns about corporate alliance decisions. Lastly, we find similar results when we use alternative definitions of alliance participation and when we use non-overlapping sample and mean annual regressions to prevent our results from being driven by cross-sectional dependence problems. The closest research to ours is a recent working paper by Fang et al. (2012) that analyzes the impact of strategic alliances on private debt placements as opposed to publicly offered debt. Our work differs significantly from theirs in at least three important ways. First, the public bond investors we are interested in typically exercise limited control over the decisions of borrowers since they have limited exposure to borrowers and face free-rider problems. As a result, bondholders tend to rely more on price protection (i.e., bond yield adjustment), which, in turn, would allow us to better evaluate how debt providers value strategic alliances. Second, our analysis relies on the at-issue yield spread of bond offerings and not all-in-drawn data in the secondary market. The issuing market for corporate bonds is reportedly more liquid than the secondary market, which facilitates efficient price discovery; thus, we believe the at-issue yield spread to be a more accurate measure of a firm’s cost of debt. Third, we additionally examine if debt providers’ valuation of alliance activity varies with the business environment that firms face, whereas Fang et al. highlight the incremental impact of a firm’s relative position in an alliance network on borrowing costs. This study contributes to the literature in several aspects. First, our analysis suggests that bondholders exhibit interest in inter-organizational alliance activities. Second, our analysis supports the notion that strategic alliances provide a measurable and significant benefit to the firms involved, namely, through lower costs of debt financing. Thus, the consequences of firm strategic decisions are broader than a focus on equity issues alone could reveal. Our investigation of firm contextual factors as potential moderating variables is also a first step in this direction. Third, we add to the literature on alliance motives by identifying a new important incentive for engaging in strategic alliances. Fourth, our findings provide additional new evidence to suggest that participation in strategic alliances is an important way to ensure the stability of future profits and to reduce information asymmetry among market participants. To our knowledge, such evidence has not been demonstrated in prior work. The remainder of the paper is organized as follows. Section 2 briefly reviews the theoretical motives and benefits of alliance formation and develops empirical hypotheses. Section 3 presents the data, variable measurements, and methodologies. Section 4 reports the empirical results. Section 5 provides additional analyses for robustness and Section 6 concludes the paper.

Corporate alliance activities have attracted great attention from business practitioners and researchers. Most of the attention, however, is directed at the impact of strategic alliances on stockholder wealth. Relatively little is understood about the impact of strategic alliances on bondholder interests. In this study, we fill this void in the literature by examining the relationship between strategic alliances and the cost of debt. We choose a setting, the corporate bond-issuing yield spread, in which we can directly measure the cost of raising debt capital. This setting also provides a powerful research design because, compared with alterative settings, the at-issue yield spread is less subject to liquidity problems, misspecification errors, and confounding concurrent events. Based on 2,150 bond issuers in 1985–2009, we find that strategic alliances are negatively associated with the bond yield spread, after controlling for firm and issuing characteristics, as well as macroeconomic conditions. This suggests that bondholders charge lower costs of debt for firms participating in strategic alliances, since they perceive superior profitability and lower information asymmetry for these firms. We also find that the effect of strategic alliance is stronger for firms facing an inferior business environment, such as higher product market competition, tighter financial constraints, and more rapid technological changes. Further analyses indicate that the reduction in the cost of debt is also related to the the firm’s past alliance experience. When breaking down the areas of alliance, we find that the decrease in the cost of debt is due to a larger extent to technology alliances, relative to marketing alliances. In addition, our results indicate that both joint ventures and contractual alliances provide benefits to the allying firms through lower costs of debt financing. Such evidence represents an extension of the management and finance literature that generally explores the association between strategic alliances and overall firm value. By separating two components of firm value, our results reveal that inter-firm alliance activities not only positively affect firm performance (i.e., the numerator of the valuation model) but also are negatively associated with financing cost (i.e., the denominator of the model). In particular, the effect on the cost of bond financing may be quite important because the bond market represents the single largest source of external capital for most firms. The findings in this study may also have implications for firms interested in reducing the cost of raising debt capital and for debt holders viewing participation in strategic alliances as a positive signal, given the lower valuation risk associated with these firms. Our research is subject to several limitations, which also open up avenues for future research. First, our finding is based strictly on the U.S. capital market. Therefore, it is difficult to draw inferences concerning the debt–cost impact of strategic alliances for other countries. There are reasons to believe that a country’s culture and economy would affect the value of forming alliances (e.g., Xin and Pearce, 1996 and Lee et al., 2013). Similarly, distinct legal regimes (such as legal protection against technological leakage) should affect the degree to which firms can sustain advantages in inter-organizational connections. Therefore the introduction of a larger dataset that includes international companies outside the United States and a comparison of the results with links to legal and institutional environments across countries would be an interesting study. Second, firms pursuing different strategies might develop and benefit from certain alliance configurations but not from others. Thus, the economic consequences of alliances may depend on firm strategy (Koka and Prescott, 2008). Future research could examine, for instance, whether alliances between competitors or between firms with more complementary positions in the value chain have distinct effects on the cost of raising capital. Finally, while our study has made a conscious attempt to analyze the effects of marketing versus technology and equity versus contractual alliances, it would be worthwhile to examine the differences between domestic and international alliances. Since international alliances necessarily involve cooperation between partners with very different orientations, skill sets, and institutional environments, they are more fragile and likely to demonstrate greater variations in outcome (Oxley and Sampson, 2004). We conjecture the inclusion of partner nationality might give us incremental explanatory power in explaining the cost of debt. In the same vein, a firm’s alliance management experience could also be examined in future research on account of its close relationship with alliance performance (Sampson, 2005).