To Merge And Acquire When The Times Are Good? The Influence Of Macro Factors On The Japanese M&A Pattern
After the burst of the "bubble" economy and the subsequent recession of the 1990's, a new era of M&A started in Japan. Following the deregulation in a number of non-tradable sectors, a relatively large number of foreign firms have entered the Japanese market, using M&As as a tool for market entry. In many sectors, the sudden exposure to international competition forced the Japanese firms in the formerly protected industries to restructure and streamline their operations in order to survive the new order. For the foreign firms, the opened-up economy has offered new business opportunities, and a chance to compete on more equal terms with the Japanese firms in their home market. Furthermore, foreign firms have now also discovered M&As as a cost-efficient tool to enter the Japanese market and achieve market-specific knowledge, instead of making expensive greenfield investments and joint ventures. For Japanese firms, international M&As have become a viable alternative to domestic ones due to market liberalization and the economic realities of the 1990s. Here, it is interesting to ask to what extent macro factors have influenced the pattern of M&As in Japan. Can macroeconomic variables explain the Japanese M&A activities, or do other factors explain them? What are the effects of institutional changes on the M&A pattern during the 1990's? In this paper, the short-run pattern of Japanese post-bubble inward (cross-border) and domestic M&As is analyzed econometrically, using Japanese macroeconomic and M&A data. The conclusions are that the post-reform pattern represents a significant shift from the previously low levels of M&As, and that domestic and inward M&As are influenced differently by macro factors, suggesting differing rationale for doing M&As. The estimation results also suggest some support for the "fire sale" argument as a driving force for Japanese M&As during the period of post-bubble recession.
|Date of creation:||23 Sep 2004|
|Date of revision:|
|Contact details of provider:|| Postal: The European Institute of Japanese Studies, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
Web page: http://www.hhs.se/en/Research/Institutes/EIJS/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sowell, Fallaw, 1992. "Modeling long-run behavior with the fractional ARIMA model," Journal of Monetary Economics, Elsevier, vol. 29(2), pages 277-302, April.
- Barkoulas, John T. & Baum, Christopher F. & Chakraborty, Atreya, 2001.
"Waves and persistence in merger and acquisition activity,"
Elsevier, vol. 70(2), pages 237-243, February.
- John T. Barkoulas & Christopher F. Baum & Atreya Chakraborty, 1997. "Waves and Persistence in Merger and Acquisition Activity," Boston College Working Papers in Economics 396, Boston College Department of Economics, revised 14 Dec 1999.
- Michael Gort, 1969. "An Economic Disturbance Theory of Mergers," The Quarterly Journal of Economics, Oxford University Press, vol. 83(4), pages 624-642.
- Burkhard Drees & Ceyla Pazarbasioglu, 1995. "The Nordic Banking Crises; Pitfalls in Financial Liberalization?," IMF Working Papers 95/61, International Monetary Fund.
- Nakamura, H. Richard, 2002. "Mapping Out the Japanese Mergers & Acquisitions Patterns - The Influence of Macro Factors on M & As," EIJS Working Paper Series 164, The European Institute of Japanese Studies.
- Diebold, Francis X. & Lindner, Peter, 1996. "Fractional integration and interval prediction," Economics Letters, Elsevier, vol. 50(3), pages 305-313, March.
- Chunlai Chen & Christopher Findlay, 2003. "A Review of Cross-border Mergers and Acquisitions in APEC," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 17(2), pages 14-38, November.
- Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000.
"Efficiency Gains from Mergers,"
Working Paper Series
543, Research Institute of Industrial Economics.
- Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
- Resende, Marcelo, 1999. " Wave Behaviour of Mergers and Acquisitions in the UK: A Sectoral Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(1), pages 85-94, February.
- Shea, Gary S, 1991. "Uncertainty and Implied Variance Bounds in Long-Memory Models of the Interest Rate Term Structure," Empirical Economics, Springer, vol. 16(3), pages 287-312.
- Chien-Hsun Chen & Hui-Tzu Shih, 2008. "Mergers and Acquisitions in China," Books, Edward Elgar Publishing, number 13069, April.
- repec:hhs:iuiwop:543 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:hhs:eijswp:0197. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nanhee Lee)
If references are entirely missing, you can add them using this form.