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Relationships matter: The impact of bank-firm relationships on mergers and acquisitions in Japan

Joseph French (), Juxin Yan, Yukihiro Yasuda and 行宏 安田

No G-1-15, Working Paper Series from Hitotsubashi University Center for Financial Research

Abstract: We dissect the influence of bank-firm relationships on mergers and acquisitions in Japan. Using a comprehensive data set spanning fifteen years, we show that stronger bank-firm relationships generally increase the likelihood and size of M&A. Contrary to conventional wisdom of the adverse effects of bank-firm relationships in Japan, such as ‘zombie lending', our results indicate that Japanese banks facilitate restructuring in the 2000's. However, in cases where a bank plays a dual role as a lender and shareholder to a firm, the likelihood and size of M&A declines. This result stems from a bank's desire to maintain existing corporate governance mechanisms and control rights.

Keywords: Mergers and Acquisitions; Relationship Banking; Japan (search for similar items in EconPapers)
JEL-codes: G01 G21 G34 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2016-06-14
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn and nep-com
Note: First Draft: March 10 This Version: June 14
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Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27960/070hcfrWP_1_015.pdf

Related works:
Journal Article: Relationships Matter: the Impact of Bank-Firm Relationships on Mergers and Acquisitions in Japan (2019) Downloads
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