When is Equity More than Just Financing ? Evidence from Strategic Alliances

  title={When is Equity More than Just Financing ? Evidence from Strategic Alliances},
  author={Sudha Krishnaswami and Venkat Subramaniam},
A strategic alliance is a hybrid organizational form that is between an arms length contract and a full-fledged merger between firms. In some alliances firms take a minority equity stake in the partner firm. We refer to these as equity alliances. Using data on 759 alliances, we examine the motivation for the use of equity in alliances. We study whether equity is intended to strengthen the contractual performance of the alliance or whether it is primarily a means of financing for the capital… CONTINUE READING
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