International Joint Ventures in Asian Emerging Markets. An event study about how the local partner´s shareholder gains are affected by the selection of foreign partner

Abstract: International Joint Ventures (IJVs) play an important role in the strong com- petitive trend towards globalization of world markets. This trend leads to greater access to the world's Asian emerging markets, which creates possibilities for eco- nomic growth for companies entering IJVs. However, problems may arise since the choice of business partner can a ect shareholder gains for the local partner. This paper examines whether it is bene cial, in terms of shareholder gains, for a local partner on an Asian emerging market to engage in an IJV together with a foreign company from a country belonging to The Group of Seven (G7) in contrary to a company from an industrialized non-G7 country. The shareholder gains to the lo- cal partners are examined by conducting event studies for the three-day cumulative abnormal returns in a sample of 106 IJVs between 2000 and 2015. To the best of our knowledge, this is the rst study that examines this, from the perspective of the local partner. The main nding suggests that there is no signi cant di erence in the gains to the local partners shareholders when the foreign partner comes from a G7 country in contrary to when the foreign partner comes from a non-G7 country. However, the local partners' rm size is found to be signi cantly related to the shareholder gain. In addition, the results show that the shareholder gains to the local partner together with a foreign partner from North America are higher than when the local partner is together with a foreign partner from Europe.