Is corporate governance important for regulated firms' shareholders?. Evidence from Japanese mergers and acquisitions

Daisuke Nogata, Konari Uchida, Naohisa Goto

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This paper compares the reaction of bidders' stock prices to acquisition announcements by regulated non-financial firms, banks, and unregulated companies in Japan. Results suggest that regulated non-financial firms do not experience a significant stock price response at merger and acquisition (M&A) announcements, although banks' and unregulated firms' M&A announcements are regarded favorably by the stock market. Furthermore, the effect of stock option usage and strict boards on the stock price response is weak for regulated non-financial bidders. The results provide additional evidence that regulation results in managerial decisions' having less influence on shareholder wealth and thereby changes the firm's optimal governance structure. In contrast, the results provide no clear evidence that, for bank bidders, there is a significantly stronger or weaker relationship between governance and the stock price response to an M&A announcement than that of unregulated firms or regulated non-financial firms. The result does not support the view that regulatory monitoring weakens the effect of ordinary governance mechanisms.

Original languageEnglish
Pages (from-to)46-68
Number of pages23
JournalJournal of Economics and Business
Volume63
Issue number1
DOIs
Publication statusPublished - Jan 1 2011

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Shareholders
Corporate governance
Mergers and acquisitions
Stock prices
Announcement
Price response
Governance mechanisms
Japan
Stock market
Governance
Managerial decisions
Stock options
Governance structure
Monitoring
Shareholder wealth

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics and Econometrics

Cite this

Is corporate governance important for regulated firms' shareholders?. Evidence from Japanese mergers and acquisitions. / Nogata, Daisuke; Uchida, Konari; Goto, Naohisa.

In: Journal of Economics and Business, Vol. 63, No. 1, 01.01.2011, p. 46-68.

Research output: Contribution to journalArticle

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