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Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period

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  • Yasushi Hamao

    (Marshall School of Business, University of Southern California)

  • Takeo Hoshi

    (Graduate School of International Relations University of California, San Diego)

  • Tetsuji Okazaki

    (Faculty of Economics, University of Tokyo)

Abstract

Recent studies have established that the Japanese stock market was quite large in the pre-war period, and played an important role in financing the economic development. The pre-war stock market in Japan, however, did not achieve its size and status quickly. Indeed, the market capitalization stayed relatively small during the early years of the stock market development in Japan. This paper studies the pre-war development of the Tokyo Stock Exchange, which eventually grew to be one of the two largest stock exchanges in the pre-war Japan, and examines why the development was rather stagnant since its establishment in 1878 to the 1910s and what led to its take-off in the late 1910s. The paper argues that the TSE stayed small because the low liquidity discouraged the new companies from listing their stocks. The lack of growth in new listed stocks meant the liquidity continued to be low until 1918, when the TSE changed its listing policy to start listing companies without waiting for their listing applications. The provides empirical evidence from listing behavior of cotton spinning firms that shows the size of the market indeed mattered for their listing decision before 1918.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2007/2007cf495.pdf
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Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-495.

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Length: 51 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:tky:fseres:2007cf495

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  1. Andrew Ellul & Marco Pagano, 2003. "IPO underpricing and after-market liquidity," CSEF Working Papers 99, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 09 Feb 2006.
  2. Takeo Hoshi & Anil Kashyap, 2004. "Corporate Financing and Governance in Japan: The Road to the Future," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582481, December.
  3. Kyle, Albert S, 1985. "Continuous Auctions and Insider Trading," Econometrica, Econometric Society, vol. 53(6), pages 1315-35, November.
  4. Miwa Yoshiro & J. Mark Ramseyer, 2000. "Banks and Economic Growth: Implications from Japanese History," CIRJE F-Series CIRJE-F-87, CIRJE, Faculty of Economics, University of Tokyo.
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