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KEIRETSU AFFILIATION AND STOCK‐MARKET‐DRIVEN ACQUISITIONS
Author(s) -
Brown Christine,
Fung Carlson
Publication year - 2009
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2009.01258.x
Subject(s) - keiretsu , business , mirroring , shareholder , stock (firearms) , enterprise value , industrial organization , value (mathematics) , monetary economics , accounting , economics , finance , corporate governance , computer science , machine learning , sociology , engineering , mechanical engineering , communication
We examine misvaluation as a driver of takeover activity in Japan. Mirroring empirical results from the United States, we find that overvaluation is an important factor affecting the dichotomy between acquirers and nonacquirers in Japan. Being affiliated to a keiretsu group appears to reduce the probability that an overvalued firm will decide to acquire another firm. Misvaluation is also an important determinant of the likelihood of a firm becoming a target; however, there is no significant difference between keiretsu and nonkeiretsu firms in this regard. Shareholders of keiretsu‐affiliated acquirers do not gain from acquisitions, whereas acquisitions by nonaffiliated firms do seem to be value enhancing.