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

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

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27349.

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Date of creation: 01 Dec 2010
Date of revision: 09 Dec 2010
Handle: RePEc:pra:mprapa:27349
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  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.
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