Does Restructuring Pay in Japan? Evidence Following the Lost Decade

Dick Beason, Ken Gordon, Vikas Mehrotra and Akiko Watanabe

No 2008-20, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: After a decade of sluggish economic growth in the 1990s, it remains an open question whether and how Japanese firms have restructured their operations, and whether these efforts have borne any fruit. Using a randomly selected sample of 300 firms from the Tokyo Stock Exchange, we collect all restructuring announcement in the 2001-2002 period. Our results are striking in that while we do find that firms engaging in restructurings of various sorts display improved earnings in the period following the restructuring announcement, shareholders do not appear to benefit from such tangible earnings improvements. After a decade of lost opportunities, market participants in Japan remain skeptical of the sustainability of such restructuring efforts (that is, will the firms revert to their "bad old ways" when the immediate crisis is over).

Keywords: Japanese corporate restructuring; restructuring announcements (search for similar items in EconPapers)
JEL-codes: G34 J60 (search for similar items in EconPapers)
Date: 2009-03
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