2001 Fiscal Year Final Research Report Summary
A Comparative Analysis of Impacts on Managerial Decision Making Caused by Short-term Earnings Pressure from Capital Markets in Japan and the United Kingdom
| Project/Area Number |
11630118
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Business administration
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| Research Institution | Tohoku University |
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Principal Investigator |
KANAZAKI Yoshio Tohoku University, Graduate School of Economics and Management, Professor, 大学院・経済学研究科, 教授 (30204572)
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| Co-Investigator(Kenkyū-buntansha) |
WAKABAYASHI Naoki Kyoto University, Graduate School of Economics, Associate Professor, 大学院・経済学研究科, 助教授 (80242155)
YAMAMOTO Masahiro Meiji University, School of Commerce, Professor, 商学部, 教授 (10261489)
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| Project Period (FY) |
1999 – 2001
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| Keywords | Capital Market / MBO / Bankruptcy Probability / M＆A / EVA / Tax Planning / Post Merger Integration / Network Analysis |
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| Research Abstract |
(1) Interview with the Representative Director of Japanese MBO Fund
From the interview, we found and summarized characteristics of Japanese MBOs.
1) Characteristics of Japanese MBOs
a. The targets are subsidiaries of large corporations and acquisitions are conducted in a friendly manner.
b. MBOs are frequently carried out in mature industries, where companies can earn stable cash flow.
2) Economic benefits intended by Japanese MBO
a. After MBO, corporations can get rid of inefficiency caused by bureaucratic control from parent companies.
b. The management has strong motives to improve performance of their company because they have stocks of their own company.
(2) A study of bankruptcy probabilities
We proposed a simple model, by which bankruptcy probabilities of small corporations can be estimated easily using accounting numbers.
(3) A study of stock price movements during the period of 40 days before and after publication of mergers.
We investigate stock price movements in 17 merger cases during the period of 40 days before and after publication of mergers. We found that average excess return on acquiring company's stocks is 13% and 9% for acquired firm's stocks.
(4) A study of Tax planning
Toward the goal of an economic value creating management, we must adopt a cash flow-based measure of EVA or CFROI. These measures are calculated on an after tax base. In the international business circumstances, Tax planning becomes an importantpoint of issue now.
(5) A study of post merger integration
We studied factors that encourage achievement of a successful merger. From our investigation of Cisco Systems and Solectorn Nakaniida we claim that network analysis is useful to improve the argument of organizational culture integration and construct more valuable theory.
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