Japanese Horizontal Keiretsu and the Performance Implications of Membership
Takehiko Isobe,
Shige Makino and
Anthony Goerzen
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Takehiko Isobe: Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan
Anthony Goerzen: University of Victoria, Canada
No 190, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University
Abstract:
Our study investigates the effect of Japanese horizontal keiretsu group membership on firm risk and return. Like prior studies, our results show that horizontal keiretsu membership has a negative effect on firm profitability. However, we find that horizontal keiretsu networks are likely to increase the gap between targeted and realized returns, which we call the outcome-aspiration gap. Moreover, in contrast to prior studies, our results indicate that keiretsu membership does not enable member firms to reduce risks by smoothing profitability. Instead, our findings provide evidence that is counter to the conventional notion that Japanese horizontal keiretsu allow their member firms to trade off profits for reduced risk.
Keywords: Horizontal keiretsu; Performance; Risk sharing (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-06
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Citations: View citations in EconPapers (15)
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp190.pdf First version, 2006 (application/pdf)
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Journal Article: Japanese horizontal keiretsu and the performance implications of membership (2006) 
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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:190
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