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On the Relationship between Japanese Manufacturing Firms and their Domestic Subsidiaries

Elizabeth L. Rose () and Kiyohiko Ito ()

Asia Pacific Journal of Management, 2004, vol. 21, issue 4, 469-490

Abstract: Much past research on ownership policy has dealt with foreign subsidiaries. In this paper, we study the ownership relationship between Japanese firms and their publicly-traded domestic subsidiaries. Using a transaction cost framework, we find that benefiting from high subsidiary profitability is not the sole motivation behind parent firms' decisions regarding equity control of their subsidiaries. Our results indicate that different policies are adopted by Japanese firms with respect to domestic and foreign subsidiaries.

Date: 2004
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Handle: RePEc:kap:asiapa:v:21:y:2004:i:4:p:469-490