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Conflicts of interest between banks and firms: Evidence from Japanese mergers

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  • Higgins, Huong N.

Abstract

This paper assesses conflicts of interest between banks and their client firms via the merger transaction by examining the wealth gain of merger acquirers who were listed on the Tokyo Stock Exchange in 1990–2004. The paper reports two main findings. First, acquiring firms did not gain from their acquisitions. Second, acquirers with stronger bank ties experienced larger wealth loss than those with weaker bank ties. These results are consistent with the hypothesis that banks played a conflicted role in mergers during the examination period.

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  • Higgins, Huong N., 2013. "Conflicts of interest between banks and firms: Evidence from Japanese mergers," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 156-178.
    • Handle: RePEc:eee:pacfin:v:24:y:2013:i:c:p:156-178
    DOI: 10.1016/j.pacfin.2013.04.004
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    Cited by:

    1. 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.
    2. Pham, Nga & Oh, K.B. & Pech, Richard, 2015. "Mergers and acquisitions: CEO duality, operating performance and stock returns in Vietnam," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 298-316.
    3. Durand, Robert B. & Laing, Elaine & Thao Ngo, Minh, 2016. "The disciplinary role of leverage: evidence from East Asian cross-border acquirers’ returns," Finance Research Letters, Elsevier, vol. 18(C), pages 83-88.
    4. Faff, Robert & Prasadh, Shyaam & Shams, Syed, 2019. "Merger and acquisition research in the Asia-Pacific region: A review of the evidence and future directions," Research in International Business and Finance, Elsevier, vol. 50(C), pages 267-278.
    5. Huong N. Higgins, 2018. "Banks and Corporate Decisions: Evidence from Business Groups," Financial Management, Financial Management Association International, vol. 47(3), pages 679-713, September.

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    More about this item

    Keywords

    Merger; Bank; Conflicts of interest; Corporate performance; Corporate governance; Japan;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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