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

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Listed author(s):
  • Mehrotra, Vikas
  • Schaik, Dimitri van
  • 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 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 often orchestrated by a common main bank. Overall our results point to a market for corporate control that is distinctly less shareholder-focused than that in the U.S., and one where creditors play an important, perhaps dominant, role in corporate governance.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/17748/1/wp2009-1a.pdf
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Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2009-01.

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Length: 33 p.
Date of creation: Aug 2009
Handle: RePEc:hit:hitcei:2009-01
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Keywords: Japanese mergers; Japanese corporate governance;

Other versions of this item:

Find related papers by 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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  1. Bradley, Michael & Desai, Anand & Kim, E. Han, 1988. "Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms," Journal of Financial Economics, Elsevier, vol. 21(1), pages 3-40, May.
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  7. Kang, Jun-Koo & Stulz, Rene M, 2000. "Do Banking Shocks Affect Borrowing Firm Performance? An Analysis of the Japanese Experience," The Journal of Business, University of Chicago Press, vol. 73(1), pages 1-23, January.
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  9. Jun-Koo Kang & Anil Shivdasani & Takeshi Yamada, 2000. "The Effect of Bank Relations on Investment Decisions: An Investigation of Japanese Takeover Bids," Journal of Finance, American Finance Association, vol. 55(5), pages 2197-2218, October.
  10. Kaplan, Steven N & Weisbach, Michael S, 1992. " The Success of Acquisitions: Evidence from Divestitures," Journal of Finance, American Finance Association, vol. 47(1), pages 107-138, March.
  11. Berkovitch, Elazar & Narayanan, M. P., 1993. "Motives for Takeovers: An Empirical Investigation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(03), pages 347-362, September.
  12. Harford, Jarrad, 2005. "What drives merger waves?," Journal of Financial Economics, Elsevier, vol. 77(3), pages 529-560, September.
  13. Weston, J Fred & Mansinghka, Surendra K, 1971. "Tests of the Efficiency Performance of Conglomerate Firms," Journal of Finance, American Finance Association, vol. 26(4), pages 919-936, September.
  14. Ralph L. Nelson, 1959. "Merger Movements in American Industry, 1895-1956," NBER Books, National Bureau of Economic Research, Inc, number nels59-1.
  15. Sheard, Paul, 1989. "The main bank system and corporate monitoring and control in Japan," Journal of Economic Behavior & Organization, Elsevier, vol. 11(3), pages 399-422, May.
  16. Matthew Rhodes-Kropf & S. Viswanathan, 2004. "Market Valuation and Merger Waves," Journal of Finance, American Finance Association, vol. 59(6), pages 2685-2718, December.
  17. Randall Morck & Masao Nakamura, 1999. "Banks and Corporate Control in Japan," Journal of Finance, American Finance Association, vol. 54(1), pages 319-339, 02.
  18. Melicher, Ronald W & Rush, David F, 1974. "Evidence on the Acquisition-Related Performance of Conglomerate Firms," Journal of Finance, American Finance Association, vol. 29(1), pages 141-149, March.
  19. repec:hrv:faseco:30748164 is not listed on IDEAS
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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. 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.
  3. Vikas Mehrotra & Randall Morck, 2017. "Governance and Stakeholders," NBER Working Papers 23460, National Bureau of Economic Research, Inc.

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