Stock Market Response to Acquisitions and Alliances in the European Telecom Industry: An Information Asymmetry Perspective

This paper investigates two kinds of strategic combinations carried out by the European telecom operators between 1986 and 2001: acquisitions, on the one hand, and strategic alliances, on the other. The aim of the paper is twofold. First, it analyzes the behavior adopted by these companies to adapt to an environment that, after the processes of globalization and privatization presents a clearly different structure. Second, it focuses on the effect that internationalization and diversification could exert over the returns obtained by the European telecom firms involved in acquisitions and alliances, differentiating when such strategic combinations are more profitable for the shareholders of the firms that carry them out.