Foreign Ownership and Firm Value in Japan
AbstractI examine the relation between Tobin's Q and the structure of foreign equity ownership for a sample of 945 industrial firms listed in the 1st Section of the Tokyo Stock Exchange. I find evidence of significant curvilinear relation between Q and the fraction of common stocks owned by foreigners in Japan. Q rises until foreign ownership reaches approximately 40% to 45%, then falls back. It appears that, in Japan, foreign institutional investors are good monitors, and foreign industrial firms increase their stakes after firms showing poor operating performance. I also find that R&D intensity and foreign ownership have weaker but a similar pattern of concave nonlinear relationship in Japan. Future research will add variables like foreign CEO appointments and the fraction of foreign members serving in the board, and examine how these variables can affect firm value in Japan.
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Bibliographic InfoPaper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2002-15.
Length: 44 p.
Date of creation: Sep 2002
Date of revision:
Note: First Version: January 11, 2001; This Version: June 18, 2002
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Foreign Ownership; Firm Value; Tobin's Q; Japan;
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
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- MIYAJIMA Hideaki, 2009. "Pluralistic Evolution of the Japanese-Style Enterprise System: Toward the Hybrid Model (Japanese)," Discussion Papers (Japanese) 09017, Research Institute of Economy, Trade and Industry (RIETI).
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