| Summary: | 碩士 === 國立成功大學 === 國際企業研究所碩博士班 === 101 === The objective of this study is to examine the relationship between strategic alliances and cost of equity. I hypothesize that the participation of strategic alliances lowers a firm’s cost of equity because of three functions of strategic alliances, including stability of firm’s future profit, reduction in information asymmetry and creating synergy effect. I obtain strategic alliance data for the period 2000–2009 from the Security Data Corporation’s (SDC). My supplementary data are collected from the Center for Research in Security Prices (CRSP) and Compustat. To calculate the cost of equity, I measure changes in the systematic risk of equity based on the market model and the three-factor model. Based on 4,128 alliances, I find that strategic alliances firms experience a significant decline in systematic risk relative to their peer firms. Furthermore, we find that the effect of strategic alliance is stronger for firms located in the high-tech industries, experiencing tighter financial constraints and facing stronger product market competition.
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