Abstract: This study aims to distinguish the effects of joint venture commitment on stock market returns according to the distribution of control based on transaction cost theory. Based on a sample of listed firms who formed joint ventures between 2009 and 2013, we examine the value effects of joint venture announcements using event study and regression analysis. Results show that stock market positively rewards joint venture announcements, and the abnormal return will increase with the aggregation of investment commitment. No significant relationship has been found on time commitment and stock returns. Further, joint ventures controlled by partner firms will be valued more by stock investors than shared control or focal firm control. We complement the existing knowledge of commitment and focal firm performance by including control as a conditional variable. This paper has great implications for managers on making investment and control decisions.

Key words: joint venture, investment commitment, time commitment, control distribution, stock market reactions, event study