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

    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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