Title

Corporate restructuring, financial deregulation, and firm value: Evidence from Japanese "spin-ins"

Authors

Authors

Y. K. Choi;S. H. Han

Comments

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Abbreviated Journal Title

Pac.-Basin Financ. J.

Keywords

Keiretsu; Deregulation; Internal restructuring; INTERNAL CAPITAL-MARKETS; INEFFICIENT INVESTMENT; DIVERSIFICATION; DISCOUNT; EMPIRICAL-ANALYSIS; BANK RELATIONS; COSTS; DEBT; PERFORMANCE; DECISIONS; DISTRESS; Business, Finance

Abstract

This paper examines the impact on firm value from the restructuring process of the keiretsu system due to Japan's deregulation. We focus on unique internal restructuring transactions called "spin-ins" that are triggered by the Amendment of the Commercial Code in 2001. We show that significant positive abnormal returns exist around the announcement of the spin-ins. These announcement returns have a positive relation to keiretsu affiliation and bank financing. Also, we find that Japanese spin-ins result in a significant improvement in investment-Q sensitivity, especially for keiretsu firms. Our results support the argument that the keiretsu system has transformed itself into a more efficient organization through the recent deregulation in financial markets. (C) 2012 Elsevier B.V. All rights reserved.

Journal Title

Pacific-Basin Finance Journal

Volume

22

Publication Date

1-1-2013

Document Type

Article

Language

English

First Page

1

Last Page

13

WOS Identifier

WOS:000314856400001

ISSN

0927-538X

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