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Grounded in agency theory, this study explores whether the separation of ownership (by shareholders) and control (by managers) in firms is an essential determinant of the valuation effect of joint ventures (JVs). This is achieved by examining the efficacy of incentive alignment mechanisms and their contingency effects. Based on a sample of 963 U.S. firms' JV investments, the results show that poor JV performance is linked to lower levels of executive ownership and reduced equity compensation. The possibility of managers acting for their own self-interest in corporate JV investments is further supported by the stronger positive performance effect of incentive alignment mechanisms documented when firms have a higher level of free cash flow or undertake JVs in unrelated business domains. Both performance measures of short-run announcement effects and long-run stock returns yield similar results. Our results underscore the importance of governing executives' self-interested actions in their JV engagements.

The question of whether an outside director with multiple board seats creates value for a firm is a subject of continued debate in the corporate governance literature. Dozens of studies have investigated this linkage over the past decades. Unfortunately, the findings generated to date are inconclusive and contradictory. This study reconciles conflicting perspectives by synthesizing the existing insights and knowledge, and develops a new three-stage S-shaped curve proposition. We target firms’ merger and acquisition (M&A) activities to test this argument. The results show a consistent horizontal S-shaped relation between the number of directorships held per director and the wealth creation from corporate M&A investments before the enactment of the Sarbanes–Oxley Act of 2002. However, the negative relation at the highest directorship level turns insignificant in the post-SOX period, suggesting that the mandatory changes by SOX may mitigate the negative impact of overboarded directors. This study contributes to the on-going debate on the performance effect of multiple directorships by providing a more complete assessment of the full range of the advantages and disadvantages across different levels of directorships. The different association patterns found in the pre-/post-SOX periods further highlight the importance of factoring in regulative environmental change when making an inference about the effect of multiple directorships.

This study aims to investigate the critical debate in corporate governance research concerning the boundary of the efficacy of the corporate governance mechanism. With particular focus on a specific set of firms' primary stakeholders, strategic alliance partners, our research design facilitates the examination of this issue. The results show a significantly positive association between a firm's corporate governance quality and the gains of its alliance partners. The proposition that firms with good governance more greatly value the interests of stakeholders whose devotion is critical is further supported by our findings of significantly positive moderating effects of the following three factors: a firm's growth potential, its business relatedness with its counterparts, and the activity types that the alliance encompasses (technical versus non-technical). Our research results suggest that firms, and thus shareholders, would economically benefit from managing their stakeholder relationships in a manner that positively affects firm prospects and shareholder wealth.

This study investigates the wealth impact for Japanese and U.S. firms that announce non-equity strategic alliances. We find that, on average, both Japanese and U.S. shareholders benefit from the formation of international alliances. We also show that shareholder gains in these alliances are significantly larger for the partnering firms with a relatively small size, higher growth opportunities, or less profitability. Finally, we document that both Japanese and U.S. partnering firms display significant improvements in operating performance over the three-year period subsequent to the formation of international alliances.

Share repurchases were deregulated in Taiwan in 2000. The regulatory provisions and the government's stated aim of market stabilization provide a setting in which share repurchases are exclusively motivated by undervaluation. This study investigates if deregulation of share repurchases is an effective method of market stabilization by investigating the intra-industry effects of repurchase deregulation in Taiwan. We find that repurchasing firms and their corresponding rivals both experience strong value creation upon the repurchase announcements. The evidence suggests that the intra-industry effect of share repurchases is negatively associated with rivals' firm size, and positively associated with the announcing firm's abnormal return, the size of share repurchases and the similarity of business operation between rivals and repurchasing firms. These findings hold even after taking into account other effects that could influence the valuation of the rival firms.