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

Vikas Mehrotra, Dimitri van Schaik, Jaap Spronk and Onno Steenbeek

Journal of Financial and Quantitative Analysis, 2011, vol. 46, issue 4, 1051-1072

Abstract: Mergers in Japan have the dubious distinction of not creating wealth for shareholders of target firms, in sharp contrast to what occurs in 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 appear to be driven chiefly by creditor concerns. In particular, where the merging firms share a common main bank, we find that merger gains are lower. Overall, our results point to a market that is distinctly less shareholder focused than that in the U.S., and a market where creditors play an important, perhaps dominant, role in corporate governance.

Date: 2011
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Working Paper: Creditor-Focused Corporate Governance: Evidence from Mergers and Acquisitions in Japan (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:46:y:2011:i:04:p:1051-1072_00

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