We are grateful to Rasmus Christensen for research assistance, to Kevin Davis for valuable comments, and particularly the referee for suggestions that improved the article.
KEIRETSU AFFILIATION AND STOCK-MARKET-DRIVEN ACQUISITIONS
Article first published online: 16 NOV 2009
© 2009 The Southern Finance Association and the Southwestern Finance Association
Journal of Financial Research
Volume 32, Issue 4, pages 479–503, Winter 2009
How to Cite
Brown, C. and Fung, C. (2009), KEIRETSU AFFILIATION AND STOCK-MARKET-DRIVEN ACQUISITIONS. Journal of Financial Research, 32: 479–503. doi: 10.1111/j.1475-6803.2009.01258.x
- Issue published online: 16 NOV 2009
- Article first published online: 16 NOV 2009
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.