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Creditor-Focused Corporate Governance: Evidence from Mergers and Acquisitions in Japan

Author

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  • Mehrotra, Vikas
  • van Schaik, Dimitri
  • Spronk, Jaap
  • Steenbeek, Onno

Abstract

Mergers in Japan have the dubious distinction of not creating wealth for shareholders of target firms, in sharp contrast to what occurs in much of the rest of the world. Using a sample of 91 mergers from 1982 through 2003 we document several distinctive features of the merger market in Japan: Mergers tend to be countercyclical and appear to be driven chiefly by creditor concerns. In particular, where the merging firms share a common main bank, we find that merger gains are lower. Overall, our results point to a market that is distinctly less shareholder focused than that in the U.S., and a market where creditors play an important, perhaps dominant, role in corporate governance.

Suggested Citation

  • Mehrotra, Vikas & van Schaik, Dimitri & Spronk, Jaap & Steenbeek, Onno, 2011. "Creditor-Focused Corporate Governance: Evidence from Mergers and Acquisitions in Japan," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(04), pages 1051-1072, September.
  • Handle: RePEc:cup:jfinqa:v:46:y:2011:i:04:p:1051-1072_00
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ushijima, Tatsuo & Schaede, Ulrike, 2014. "The market for corporate subsidiaries in Japan: An empirical study of trades among listed firms," Journal of the Japanese and International Economies, Elsevier, vol. 31(C), pages 36-52.
    2. repec:uts:finphd:35 is not listed on IDEAS
    3. Fatemi, Ali M. & Fooladi, Iraj & Garehkoolchian, Niloofar, 2017. "Gains from mergers and acquisitions in Japan," Global Finance Journal, Elsevier, vol. 32(C), pages 166-178.
    4. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," NBER Working Papers 23845, National Bureau of Economic Research, Inc.
    5. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," Working Papers id:12112, eSocialSciences.
    6. Vikas Mehrotra & Randall Morck, 2017. "Governance and Stakeholders," NBER Working Papers 23460, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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