Banks, Ownership Structure, and Firm Value in Japan
57 Pages Posted: 12 Apr 2000
We study the relation between firms? banking relations, ownership structures, and q ratios in Japan. At low levels of equity ownership by main banks, firms? q ratios fall as bank equity ownership rises. At higher levels of bank equity ownership, this relationship is mitigated and, in some specifications, even reversed. We argue that this relation reflects both costs and benefits of equity holdings by banks. In Japan, unlike the US, firm value rises monotonically with increased managerial ownership. Equity ownership by corporate blockholders is also positively related to firm value in Japan.
JEL Classification: G21, G32
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