Nakamura, Richard () (European Institute of Japanese Studies)
Abstract
After the burst of the "bubble" economy and the subsequent recession of the 1990's, a new era of M&A started in Japan. Following the deregulation in a number of non-tradable sectors, a relatively large number of foreign firms have entered the Japanese market, using M&As as a tool for market entry. In many sectors, the sudden exposure to international competition forced the Japanese firms in the formerly protected industries to restructure and streamline their operations in order to survive the new order. For the foreign firms, the opened-up economy has offered new business opportunities, and a chance to compete on more equal terms with the Japanese firms in their home market. Furthermore, foreign firms have now also discovered M&As as a cost-efficient tool to enter the Japanese market and achieve market-specific knowledge, instead of making expensive greenfield investments and joint ventures. For Japanese firms, international M&As have become a viable alternative to domestic ones due to market liberalization and the economic realities of the 1990s.
Here, it is interesting to ask to what extent macro factors have influenced the pattern of M&As in Japan. Can macroeconomic variables explain the Japanese M&A activities, or do other factors explain them? What are the effects of institutional changes on the M&A pattern during the 1990's? In this paper, the short-run pattern of Japanese post-bubble inward
(cross-border) and domestic M&As is analyzed econometrically, using Japanese macroeconomic and M&A data.
The conclusions are that the post-reform pattern represents a significant shift from the previously low levels of M&As, and that domestic and inward M&As are influenced differently by macro factors, suggesting differing rationale for doing M&As. The estimation results also suggest some support for the "fire sale" argument as a driving force for Japanese M&As during the period of post-bubble recession.
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Paper provided by The European Institute of Japanese Studies in its series EIJS Working Paper Series with number
197.
Length: 27 pages Date of creation: 23 Sep 2004 Date of revision: Handle: RePEc:hhs:eijswp:0197
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Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000.
"Efficiency Gains from Mergers,"
Working Paper Series
543, Research Institute of Industrial Economics.
[Downloadable!]
Other versions:
Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2000.
"Efficiency Gains from Mergers,"
CIG Working Papers
FS IV 00-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
[Downloadable!]