Analyzing joint ventures as corporate control activity

We analyze joint ventures initiated by two publicly traded firms, and compare the results to asset sales and mergers. Combined returns are significantly greater for joint ventures than asset sales, and smaller than mergers. Gains are shared between joint venture parties, unlike asset sales and mergers where all gains accrue to sellers/targets. Ownership structure has no effect on joint venture returns. Combined gains from quasi-asset-sale joint ventures are significantly greater than for asset sales, and similar to mergers. Horizontal joint ventures generate greater gains than vertical or cross-industry ventures, and there is evidence that horizontal ventures capitalize expected monopoly rents.