Does Restructuring Pay in Japan? Evidence Following the Lost Decade

34 Pages Posted: 23 Jul 2008

See all articles by Dick Beason

Dick Beason

University of Alberta - Department of Marketing, Business Economics & Law

Ken Gordon

JapanInvest

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis

Akiko Watanabe

University of Alberta - School of Business; University of Alberta - Department of Finance and Statistical Analysis

Date Written: July 21, 2008

Abstract

After a decade of sluggish economic growth in the 1990s, it remains an open question whether and how Japanese firms have restructured their operations, and whether these efforts have borne any fruit. Using a randomly selected sample of 300 firms from the Tokyo Stock Exchange, we collect all restructuring announcement in the 2001-2002 period. Our results are striking in that while we do find that firms engaging in restructurings of various sorts display improved earnings in the period following the restructuring announcement, shareholders do not appear to benefit from such tangible earnings improvements. After a decade of lost opportunities, market participants in Japan remain skeptical of the sustainability of such restructuring efforts (that is, will the firms revert to their "bad old ways" when the immediate crisis is over).

Keywords: Japanese corporate restructuring, restructuring announcements

JEL Classification: G34, J60

Suggested Citation

Beason, Dick and Gordon, Ken and Mehrotra, Vikas and Watanabe, Akiko, Does Restructuring Pay in Japan? Evidence Following the Lost Decade (July 21, 2008). Available at SSRN: https://ssrn.com/abstract=1169743 or http://dx.doi.org/10.2139/ssrn.1169743

Dick Beason

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Ken Gordon

JapanInvest

48 Curzon St.
London W1J 7UL
United Kingdom

Vikas Mehrotra (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

School of Business
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-2976 (Phone)
780-492-3325 (Fax)

Akiko Watanabe

University of Alberta - School of Business ( email )

3-30A Business Building
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-0385 (Phone)
780-492-3325 (Fax)

HOME PAGE: http://www.bus.ualberta.ca/awatanabe

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada

HOME PAGE: http://www.bus.ualberta.ca/awatanabe

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