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“Corporate restructuring issues under the holding company structure – The NTT Case in Japan”

Author

Listed:
  • Dinh, Huy Tran Ngoc
  • Kei, Nishino
  • Maulana, Achmad Rizzqi
  • Koh, Gek Pin
  • Liu, Yang

Abstract

ABSTRACT This research paper focused on the corporate restructuring of Nippon Telegraph Telecommunication (NTT Group) under the pure holding company structure in 1999 and its implications. In order to understand the holding company structure, we introduced the concept of "internal capital markets" and explained its application within the framework of NTT Group. Next, we gave an account of the background events leading to NTT Group's corporate restructuring in order to understand the reason for choosing and keeping the holding company structure. Our research methodologies include interviews with NTT Group's management and data from public sources. Finally, to analyze the effect of the holding company structure to NTT Group, we conducted a hypothetical valuation analysis using the free cash flow model. Comparing the market value of NTT Group with our valuation results, it appeared that the market has undervalued NTT Group. We concluded our report with some suggestions on how NTT Group might be able to increase their market value.

Suggested Citation

  • Dinh, Huy Tran Ngoc & Kei, Nishino & Maulana, Achmad Rizzqi & Koh, Gek Pin & Liu, Yang, 2010. "“Corporate restructuring issues under the holding company structure – The NTT Case in Japan”," MPRA Paper 27349, University Library of Munich, Germany, revised 09 Dec 2010.
  • Handle: RePEc:pra:mprapa:27349
    as

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    File URL: https://mpra.ub.uni-muenchen.de/27349/1/MPRA_paper_27349.pdf
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    References listed on IDEAS

    as
    1. Stein, Jeremy C, 1997. " Internal Capital Markets and the Competition for Corporate Resources," Journal of Finance, American Finance Association, vol. 52(1), pages 111-133, March.
    2. Mihir A. Desai & C. Fritz Foley & James R. Hines, 2004. "A Multinational Perspective on Capital Structure Choice and Internal Capital Markets," Journal of Finance, American Finance Association, vol. 59(6), pages 2451-2487, December.
    3. Mari Sako & Gregory Jackson, 2003. "Enterprise Boundaries and Employee Representation: Deutsche Telekom and NTT Compared," Discussion papers 03025, Research Institute of Economy, Trade and Industry (RIETI).
    4. Robert H. Gertner & David S. Scharfstein & Jeremy C. Stein, 1994. "Internal versus External Capital Markets," NBER Working Papers 4776, National Bureau of Economic Research, Inc.
    5. Robert H. Gertner & David S. Scharfstein & Jeremy C. Stein, 1994. "Internal versus External Capital Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1211-1230.
    6. Akiyoshi Horiuchi & Veronica Taylor & Leon Wolff, 2000. "Implications of Recent Japanese Legal Reforms," Asia Pacific Economic Papers 302, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    HOLDING COMPANY STRUCTURE; RESTRUCTURING; INTERNAL CAPITAL MARKET; VALUATION;

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General

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