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Preliminary Report on the Current State of Mergers & Acquisitions in Japan

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  • Nakamura, Richard

    () (European Institute of Japanese Studies)

Abstract

In recent years, the pattern of M&As in Japan has changed significantly. Increasingly, managers and owners of Japanese firms seem to have realized that there are efficiency benefits with M&As, and that there exist strategic dimensions in doing M&As. Almost on a daily basis, newspapers report on new M&A deals, involving all industries in the country. However, the skepticism to M&As is still very deep-rooted, and there are fewer Out-In M&As than In-In M&As. The distribution of M&A activities among the industrial sectors is extremely uneven, as well as the distribution of the type of M&A. Overall, acquisitions and capital participation are the most common modes of M&A. Looking closer, the pattern of M&A depends on the industry and the competition situation in that particular industry. Further, in studying Japanese M&As, a distinction between large firms and small- and medium-sized firms is necessary. The reason for this is the difference in nature between these two groups of firms. While large firms are international enough to recognize a foreign firm as a suitable M&A partner or buyer, SMFs make M&A decisions out of a different set of perceptions. Therefore, the M&A behavior becomes more diverse in the latter group than in the large firms sector. The conclusions of this paper are twofold. First, apart from the M&A pattern itself, the cultural factors heavily influence the M&A decisions of all firms in Japan. Second, the future of Out-In M&As is much dependent on how much the Japanese economic performance improves.

Suggested Citation

  • Nakamura, Richard, 2002. "Preliminary Report on the Current State of Mergers & Acquisitions in Japan," EIJS Working Paper Series 140, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0140
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    References listed on IDEAS

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    1. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
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    More about this item

    Keywords

    Japan; Mergers & Acquisitions; Keiretsu; Small-and Medium-sized firms.;

    JEL classification:

    • 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

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