Price and Volume Effects of Merger Bids in Japan

32 Pages Posted: 18 Sep 2004

See all articles by Dimitri van Schaik

Dimitri van Schaik

PricewaterhouseCoopers, Netherlands

Onno W. Steenbeek

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); APG All Pensions Group

Date Written: September 17, 2004


We study 136 domestic mergers between non-financial companies in Japan between 1993 and 2003. Consistent with other findings, and in contrast to US evidence, bidders show a positive abnormal return around the announcement date of approximately 1.4%. The largest return is being realized in the 2 days before the announcement, but gains are quickly lost thereafter. Interestingly, trading volume appears to increase after the announcement. Over the period 1977-1993 Kang et al. (2000) find a strong positive association between announcement returns and the strength of bidders' relationship with banks, but this result is not confirmed over the subsequent decade. This may indicate that corporate control in Japan has evolved over the past decade and the importance of the main bank has diminished. Announcement returns are related to the presence of a common shareholder holding shares in both the bidder and the target company and whether the deal took place after 1997. For the volume effect we find an association with the size of the target company relative to the bidder company.

Keywords: Mergers and Acquisitions, Restructuring, Corporate Governance

JEL Classification: G34

Suggested Citation

van Schaik, Dimitri and Steenbeek, Onno W., Price and Volume Effects of Merger Bids in Japan (September 17, 2004). Available at SSRN: or

Dimitri Van Schaik

PricewaterhouseCoopers, Netherlands ( email )


Onno W. Steenbeek (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

Dept. of Finance, H14-1
P.O. Box 1738
3000 DR Rotterdam, 3000DR
+31-10-4081400 (Phone)
+31-10-4089165 (Fax)


APG All Pensions Group ( email )

Gustav Mahlerplein 3
P.O. Box 75283
1070 AG Amsterdam
+31-20-6049122 (Phone)
+31-20-4059176 (Fax)


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