2007 Fiscal Year Final Research Report Summary
Empirical Examinations of the Significance of Equity Ownership Structure in Japanese Corporate Groups
| Project/Area Number |
18530228
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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 |
Public finance/Monetary economics
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| Research Institution | Hitotsubashi University (2007)
University of Tsukuba (2006) |
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Principal Investigator |
ITO Akitoshi Hitotsubashi University, Graduate School of International Corporate Strategy, Associate Professor (80307371)
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| Project Period (FY) |
2006 – 2007
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| Keywords | Listed subsidiary company / Corporate eovernance / Internal capital market / Investment funds / Going private / Agency cost |
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| Research Abstract |
This research has two main objectives. First, this research examines listed subsidiary companies within Japanese corporate groups from a perspective of the internal capital market by building the detailed database about listed parent and subsidiary companies for the period from 2004 to 2005. Second, this research also examines economic impacts of buyout transactions such as going-private transactions that may play a very important role in restructuring Japanese corporate groups.
For the first objective, this research finds that for Japanese corporate groups the degree of diversity is not associated with performance of listed subsidiaries, which implies that the internal capital market does not function well. However, a close examination reveals that for subsidiaries with low-risk projects the business diversity of the corporate group enhances the performance of subsidiary companies. Thus, the function of the internal capital market only breaks down for subsidiary companies with high-risk projects. We interpret these results as indicating that for the subsidiaries engaging in high-risk, high-growth projects, there may be an incentive issue for the managers of the subsidiary companies due to too much control exerted by their parent companies.
For the second objective, this research conducts standard event study about the buyout transactions that involve investment funds specifically launched for buyouts. We find that the stock price reactions to the buyout announcements are on average positive and statistically significant. Our examinations further reveal that sources of the positive stock price reactions to the buyout announcements are the tax effect of leverage-increasing transactions (i.e., LBO)and the reversed undervaluation of target companies.
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[Presentation] 上場子会社の実証分析2007
Author(s)
伊藤 彰敏
Organizer
2007年度日本ファイナンス学会大会
Place of Presentation
慶應義塾大学
Year and Date
2007-06-17
Description
「研究成果報告書概要(和文)」より
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