Jun-Koo Kang (Eli Broad College of Business, Michigan State University,) Anil Shivdasani (Kenan-Flagler Business School, University of North Carolina at Chapel Hill,) Takeshi Yamada (Hong Kong University of Science and Technology)
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We study 154 domestic mergers in Japan during 1977 to 1993. In contrast to U.S. evidence, mergers are viewed favorably by investors of acquiring firms. We document a two-day acquirer abnormal return of 1.2 percent and a mean cumulative abnormal return of 5.4 percent for the duration of the takeover. Announcement returns display a strong positive association with the strength of acquirer's relationships with banks. The benefits of bank relations appear to be greater for firms with poor investment opportunities and when the banking sector is healthy. We conclude that close ties with informed creditors, such as banks, facilitate investment policies that enhance shareholder wealth. Copyright The American Finance Association 2000.
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Volume (Year): 55 (2000) Issue (Month): 5 (October) Pages: 2197-2218 Download reference. The following formats are available: HTML
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