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Keiretsu Affiliation And Stock‐Market‐Driven Acquisitions

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  • Christine Brown
  • Carlson Fung

Abstract

We examine misvaluation as a driver of takeover activity in Japan. Mirroring empirical results from the United States, we find that overvaluation is an important factor affecting the dichotomy between acquirers and nonacquirers in Japan. Being affiliated to a keiretsu group appears to reduce the probability that an overvalued firm will decide to acquire another firm. Misvaluation is also an important determinant of the likelihood of a firm becoming a target; however, there is no significant difference between keiretsu and nonkeiretsu firms in this regard. Shareholders of keiretsu‐affiliated acquirers do not gain from acquisitions, whereas acquisitions by nonaffiliated firms do seem to be value enhancing.

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  • Christine Brown & Carlson Fung, 2009. "Keiretsu Affiliation And Stock‐Market‐Driven Acquisitions," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(4), pages 479-503, December.
    • Handle: RePEc:bla:jfnres:v:32:y:2009:i:4:p:479-503
    DOI: 10.1111/j.1475-6803.2009.01258.x
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    2. Cao, Kien & Coy, Jeffrey & Nguyen, Thuy, 2016. "The likelihood of management involvement, offer premiums, and target shareholder wealth effects: Evidence from the 2002–2007 LBO wave," Research in International Business and Finance, Elsevier, vol. 36(C), pages 641-655.

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