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Information Revealing Effects of Anti-takeover Amendments: A case of Japan in 2005

Sumio Hirose, Tomotaka Fujita and Noriyuki Yanagawa
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Sumio Hirose: Faculty of Economics, Shinshu University
Tomotaka Fujita: Graduate Schools for Law and Politics, University of Tokyo
Noriyuki Yanagawa: Faculty of Economics, University of Tokyo

No CARF-J-041, CARF J-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: In 2005, Japanese firms were allowed to introduce the anti-takeover amendments. By using of the data of 2005, this paper examined the incentives and effects of anti-takeover amendments in Japan. It has shown that the performances of the ATA introduced firms dropped in 2005 fiscal year. These performances changes occurred just after the introduction of ATA. Hence we can conclude that ATAs have been introduced by the firm whose managers recognized that their performances would be decreased. By checking the stock prices of those firms by using of an event study technique, this paper found that the movements of stock prices were consistent with the changes of performances. In other words, the introduction of ATA has revealed the negative signal to the market. Moreover, this paper shows that explicit ATAs were more negatively judged than implicit ATAs from the market. The average abnormal returns of ATA introduced firms whose simple Q is lower than 1 were negative even when the estimation window is extended to 35 days. 2

Pages: 40 pages
Date: 2007-08
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