2005 Fiscal Year Final Research Report Summary
An econometric analysis of the economic effect caused by the increase of the number of corporate reorganization and merger & acquisitions carried out by the buyout funds.
| Project/Area Number |
16530211
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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 | Yokohama City University |
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Principal Investigator |
MARUYAMA Hiroshi Yokohama City University, International Graduate School of Arts and Sciences, Professor, 国際総合科学研究科, 教授 (30181837)
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| Project Period (FY) |
2004 – 2005
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| Keywords | managerial finance / corporate finance / Corporate Reorganization Law / investment fund / debt recovery rate |
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| Research Abstract |
This paper provides empirical evidence that recent buyout fund boom in Japan influenced debt recovery rates in corporate reorganization cases. A sample of 110 corporate reorganization cases is divided into two groups, those commenced before 1998 and after 1999,to capture potential economic influence brought by buyout fund boom. Mainly relying on the theoretical considerations provided by Shleifer-Vishny's model which explains the relationship between industry conditions and the type of bidders, I developed a hypothesis ; deep pocket hypothesis. To test this hypothesis empirically, I categorized each reorganizing firm as either a firm belonging to a prosperous industry or a depressed industry. While this categorization significantly affects the regression estimates of recovery rates for ‘before 1998 cases', it shows no effect for ‘after 1999 cases'. The results suggest that the increase of the number of buyout funds that become sponsors in corporate reorganization cases in depressed industries alleviates the negative impact for recovery rates caused by industry conditions.
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