Corporate equity ownership, strategic alliances, and product market relationships

This paper examines long-term block ownership by corporations and performan ce changes in firms with corporate block owners. We also examine potential reasons for corporate ownership including benefits in product market relati onships, alleviation of financing constraints, and board monitoring by corp orate owners. We find the largest significant increases in targets' stock p rices, investment, and operating profitability when ownership is combined w ith alliances, joint ventures, and other product market relationships betwe en purchasing and target firms, especially in industries with high research and development. Our findings are consistent with the conclusion that bloc k ownership by corporations has significant benefits in product market rela tionships.