Study On The Impact Of Business Cooperation Policy On Firm Performance

It is getting harder for a firm to survive in an uncertain and intense market environment. In order to obtain knowledge and resources to create and maintain its competitive advantage, a firm has to cooperate with other organizations. And with cooperation increasing, types of organizations with whom a firm could cooperate become more, such as firms, government, university and research institutions(PROs). However, will cooperation have a positive or negative impact on the shareholder returns and corporate performance? To what extent? All of these questions should be solved urgently for the managers. An event study based on the secondary data is conducted to examine the impact of cooperation on enterprises’ short-term performance based on 590 Chinese cooperation events happening from 2007 to 2014.In this paper, short-term event stdudy is conducted based on cumulative abnormal returns(CARs) method to calculate cumulative abnormal returns of the corporate in the short event period(Day-1 and 0) to obtain the empirical analysis. To expand our study, we also use BHARs to analysis our samples which is a common methodology of long-run event studies.First of all, we find that, generally, the announcing of ooperation results in a positive cumulative abnormal returns of 1.97% in event window.Secondly, we also find that after a subdivision of samples, firm-firm ooperation acquired significantly positive cumulative abnormal returns in day 0 and event window. Firm-government ooperation acquired positive cumulative abnormal returns of 1.97%, and firm-PROs ooperation acquired positive cumulative abnormal returns of 2.36%.Thirdly, after regional classification, we can see that cooperation with foreign companies allows companies to get higher cumulative abnormal returns, namely 2.29%, which is higher than firms in China.Fourthly, classified by the forms of cooperation, we find the average abnormal returns of business cooperation between enterprises was 2.22%, but not significantly. Equity restructuring(capital increase, share transfer, etc.), joint ventures and cooperation in other fields have made significant positive cumulative abnormal returns.In cooperation based on technology, markets, funds or resources, we basically get significant positive cumulative abnormal returns except funds.In fact, no matter cooperation with banks, cooperative financial services or financing cooperation, in this study they are essentially the same, samples are also the same. The average abnormal returns of-0.06 %, and-0.16% in mid-value, indicating that it may have a visible and weak short-term negative impact on a firm.Last but not the least, by matching company size and book-market ratio capitalization ratio for our samples,we get positive BHARs, and the results of one year event window is better than two year event window.