Forecasting market reaction permanence based on initial reaction: The case of technology partnerships in finland

Technology alliances present in concurrent competitive global business environment an important corporate activity to enhance the innovative engineering and technology capabilities. In present research, there exist a large number of event studies conducted on the technology alliance announcements´ effects on the stock price and hence corporate value creation for shareholders. However, the intra-day reaction to technology alliance announcements and persistence of this reaction over time as well as the forecasting of the later returns has eluded earlier research. This study uses technology alliances announced in NASDAQ HEX between 2006 and 2010 to examine the returns and their permanence on the share price over different intervals between 1 minute and 1 day after the announcements to study whether the initial reaction can be used to forecast later reaction on the share price returns. The research is using intra-day and day-level event study method to find out what level of Cumulative Abnormal Return (CAR) is generated by the announcements. As a difference to the earlier studies, this study aspires to show that the first reaction within minutes after the announcement can be used to forecast the returns in the longer term. This study investigates whether short term minute reaction can be used to forecast longer term reaction up to the following day.