Wealth Effects of Acquisitions in New Active Market for Corporate Control
50 Pages Posted: 15 Feb 2014
Date Written: February 14, 2014
This study examines wealth effects of mergers and acquisitions in developing mergers and acquisitions market by using data of both domestic and cross-border acquisitions by Japanese firms. Although Japan had the second largest GDP in the world during the analyzed period, active market for corporate control in Japan started recently. The results indicate that M&A by Japanese firms enhance shareholder wealth. We also show that larger synergy realized in horizontal acquisitions with full control of target firms. Existence of outside directors and monitoring by shareholders contribute the post-acquisition performance. We provide evidence that acquisitions by Japanese firms play similar role as those in the US and the UK.
Keywords: Mergers and acquisitions, Japan, Corporate governance, Long-term performance
JEL Classification: G14, G32, G34, L25
Suggested Citation: Suggested Citation