We investigate share price responses to the formation of 345 strategic alliances spanning 1983–1992. The average stock price response is positive, with no evidence of wealth transfers. This is true for horizontal alliances (involving partner firms in industries with the same three-digit SIC codes) as well as non-horizontal alliances. For horizontal alliances, more value accrues when the alliance involves the transfer or pooling of technical knowledge than with nontechnical alliances. Finally, partnering firms tend to display better operating performance than their industry peers over the five-year period surrounding the year in which an alliance is formed.

It Is commonplace within the confines of finance literature to explain variations in the firm's residual income stream via the dichotomy of business risk and financial risk. On an ex-post basis the business risk of the enterprise is a direct result of the firm's investment decision and is, thereby, embodied in its asset structure. It follows that the company's cost structure, product demand characteristics, intra-industry competitive position, and managerial talent all affect its business risk posture.

1. An Introduction to Financial Management.Appendix: Methods of Depreciation. 2. The Role of Financial Markets and Interest Rates in Financial Management. 3. Evaluating a Firms Financial Performance and Measuring Cash Flow. 4. Financial Forecasting, Planning, and Budgeting. 5. The Time Value of Money. 6. Risk and Rates of Return.Appendix: Measuring the Required Rate of Return: The Arbitrage Pricing Model. 7. Bond Valuation. 8. Stock Valuation.Appendix: The Relationship Between Value and Earnings. 9. Capital-Budgeting Decision Criteria. 10. Cash Flows and Other Topics in Capital Budgeting. 11. Capital Budgeting and Risk Analysis. 12. Cost of Capital. 13. Analysis and Impact of Leverage. 14. Planning the Firms Financing Mix. 15. Dividend Policy and Internal Financing. 16. Working-Capital Management and Short-Term Financing. 17. Cash and Marketable Securities Management.Appendix: Cash-Management Models: Split Between Cash and Near Cash. 18. Accounts Receivable, Inventory, and Total Quality Management. 19. Term Loans and Leases. 20. The Use of Futures, Options, and Currency Swaps to Reduce Risk.Appendix: Convertible Securities and Warrants. 21. Corporate Restructuring: Combinations and Divestitures. 22. International Business Finance. Appendix A: Using a Calculator. Appendix B: Compound Sum of $1. Appendix C: Present Value of $1. Appendix D: Sum of an Annuity of $1 for n Periods. Appendix E: Present Value of an Annuity of $1 for n Periods. Appendix F: Solutions for Selected End-of-Chapter Problems. Glossary. Organization Index. Subject Index.