Abstract
The study tests the abnormal returns of announcements of joint-venturing in Mainland China by Hong Kong-based companies. As the Hong Kong stock market is one of the most mature stock markets in the world, the response of the stock price should be among the best quality. Thus the positive response suggests that international joint ventures provide potential profits to the parent firms, which is predicted by the nowadays standard eclectic theory. The result supports the hypothesis of abnormal returns.
Acknowledgements
This paper is partially supported by a small-scale grant from City University of Hong Kong. We express our thanks to Mark Po and Edith Ka-Yan Wong as research assistants.