Advertisement

Institutional Investors

  • Ralf Bebenroth
Chapter

Abstract

Equity stake purchases by institutional investors is a phenomenon that has become increasingly common in Japan. This chapter investigates how the post-acquisition performance of target firms differs across domestic versus cross border and friendly versus unfriendly equity stake purchases. Two contrasting concepts, the arms-length principle and geographic-proximity theory are applied. Results partly confirm that Japanese equity stake purchased target firms in an unfriendly attempt performed better right after the deal. Subsequently, the performance was significantly higher for equity stake purchased target firms by cross border institutional investors compared to domestic ones. The number of employees after the purchase decreased significantly for Japanese and for friendly attempts but increased for cross border and unfriendly ones. Implications are discussed.

Keywords

Corporate Governance Institutional Investor Hedge Fund Japanese Firm Cross Border 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Anderson DW, Melanson SJ, Maly J (2007) The evolution of corporate governance: power redistribution brings boards to life. Corp Gov Int Rev 15(5):780–797CrossRefGoogle Scholar
  2. Asaba S (2005) Do foreign shareholders change Japanese firms? Working paper presented at the 65th academy of management, annual meeting; 5–10 August 2005; Hawaii, USAGoogle Scholar
  3. Baik B, Kang J-K, Kim J-M (2010) Local institutional investors, information asymmetries, and equity returns. J Financ Econ 97:81–106CrossRefGoogle Scholar
  4. Bainbridge SM (2012) Mergers and acquisitions, 3rd edn. Foundation Press, New YorkGoogle Scholar
  5. Bebenroth R, Kshetri N (2013) Post-acquisition performance of Japanese firms: domestic vs. cross-border equity stake purchases. J Knowl Glob 6(1):1–22Google Scholar
  6. Bundo H (2000) 1980 nendai shoukenshijou to M&A undou –kikan toushika niokeru hoyuu kabushiki no baibai undou. (M&A movements of institutional investors in the 1980’s—M&A movement and stock selling behavior of institutional investors [in Japanese]. Jpn Financ Manage Assoc 3:39–46Google Scholar
  7. Campa JM, Hernando I (2006) M&A performance in the European financial industry. J Bank Financ 30:3367–3392CrossRefGoogle Scholar
  8. Choe H, Bong-Chan K, Stulz RM (2005) Do domestic investors have an edge? The trading experience of foreign investors in Korea. Rev Financ Stud 18(3):795–829CrossRefGoogle Scholar
  9. Choi S, Francis BB, Hasan I (2010) Cross-border bank M&As and risk: evidence from the bond market. J Money Credit Bank 42(4):615–645CrossRefGoogle Scholar
  10. Connelly BL, Tihanyi L, Certo ST, Hitt MA (2010) Marching to the beat of different drummers: the influence of institutional owners on competitive actions. Acad Manage J 53(4):723–742CrossRefGoogle Scholar
  11. Davis G, Kim EH (2007) Business ties and proxy voting by mutual funds. J Financ Econ 85:552–570CrossRefGoogle Scholar
  12. Feito-Ruiz I, Menéndez-Requejo S (2011) Cross-border mergers and acquisitions in different legal environments. Int Rev Law Econ 31(3):169–187CrossRefGoogle Scholar
  13. Ferreira MA, Matos P (2008) The colors of investors’ money: the role of institutional investors around the world? J Financ Econ 88:499–533CrossRefGoogle Scholar
  14. Ferreira MA, Massa M, Matos P (2010) Shareholders at the gate? Institutional investors and cross-border mergers and acquisitions. Rev Financ Stud 23:601–644CrossRefGoogle Scholar
  15. Filatotchev I, Toms S (2006) Corporate governance and financial constraints. J Manage Stud 43:407–433CrossRefGoogle Scholar
  16. Fleming G, Johnson RS (2008) How countries are impacted by mergers and acquisitions: a theoretical approach. Va Econ J 13:33–40Google Scholar
  17. Fukutani N, Dobashi M (2008) M&A tekitaiteki baishuu bouei kanzen manyuaru (Full manual against unfriendly acquisitions) Chuuo Keizai Sha, TokyoGoogle Scholar
  18. Ganesan S, Malter AJ, Rindfleisch A (2005) Does distance still matter? Geographic proximity and new product development. J Mark 69(4):44–60CrossRefGoogle Scholar
  19. Gillan SL, Starks LT (2007) The evolution of shareholder activism in the United States. J Appl Corp Financ 19:55–73CrossRefGoogle Scholar
  20. Goergen M, Renneboog L (2008) Contractual corporate governance. J Corp Financ 14:166–182CrossRefGoogle Scholar
  21. Gonnard E, Eun JK, Ynesta I (2009) Recent trends in institutional investors statistics. OECD J Financ Mark Trend 2008(2):299–320Google Scholar
  22. Helwege J, Intintoli VJ, Zhang A (2012) Voting with their feet or activism? Institutional investors’ impact on CEO turnover. J Corp Financ 18(1):22–37CrossRefGoogle Scholar
  23. Hong G, Lee BS (2011) The trading behavior and price impact of foreign, institutional, individual investors and government: evidence from Korean equity market. Jpn World Econ 23(4):273–287CrossRefGoogle Scholar
  24. Kaplan SN, Rauh J (2009) Wall street and main street: what contributes to the rise in the highest incomes? Rev Financ Stud 23:1004–1050CrossRefGoogle Scholar
  25. Koh PS (2007) Institutional investor type, earnings management and benchmark beaters. J Account Public Policy 26:267–299CrossRefGoogle Scholar
  26. Krugman P (1991) Geography and trade. MIT Press, CambridgeGoogle Scholar
  27. Lok J (2010) Institutional logics as identity projects. Acad Manage J 53(6):1305–1335CrossRefGoogle Scholar
  28. MacDonald SB (2007) Japanese M&A—the surf’s up. http://www.atimes.com/atimes/Japan/IA11Dh01.html. Accessed 25 March 2014
  29. Mallin CA (1996) The voting framework: a comparative study of voting behaviour of institutional investors in the U.S. and the U.K. Corp Gov 4(2):107–122CrossRefGoogle Scholar
  30. Nakahara K (2008) It’s best not to stand out. Nikkei business online. June 9th 2008. http://business.nikkeibp.co.jp/article/eng/20080609/161053/. Accessed 22 June 2011
  31. Ohno K (1999) Nihon kigyou no guro-baruka ni motomerareru kigyousha ishiki ni kan suru: M&A no jimu kara no shisa [in Japanese] A study on management focus required to globalize Japanese corporations: a suggestion from M & A affairs [in Japanese]. Nippon Acad Manage 40:47–51Google Scholar
  32. Shleifer A, Summers L (1988) Breach of trust in hostile takeovers’. In: Auerbach A (ed) Corporate takeovers: causes and consequences. University of Chicago Press, ChicagoGoogle Scholar
  33. Sirower MC (1997) The synergy trap: how companies lose the acquisition game. Free Press, New YorkGoogle Scholar
  34. Sudarsanam S, Mahate AA (2006) Are friendly acquisitions too bad for. Shareholders and managers? Long-term. Value creation and top management. Turnover in hostile and friendly acquirers. Br J Manage 17:7–30CrossRefGoogle Scholar
  35. TSE (2009) Tokyo stock exchange share ownership survey. http://www.tse.or.jp/english/market/data/shareownership/b7gje60000003t0u-att/English2009.pdf. Accessed 12 April 2011
  36. WIP Japan (2014) Invest Japan. Foreign direct investment promotion. Cabinet office. http://www.invest-japan.go.jp/en_index.html. Accessed 16 May 2014
  37. Wu C (2010) Liquidity discount in valuing unlisted targets–Japanese M&A market evidence. http://bai-conference.org/files/BAI2010%20Proceeding/ISFA2010/Papers/9130.pdf. Accessed Feb 2012
  38. Yamamoto T (2009) shijou no hikouritsusei to TOB zenryaku-Nihon ni okeru riron to kesu) (The impact of market inefficiency on TOB strategies in Japan: a theory and a case in Japan) [in Japanese]. J Manage Account Jpn 17(2):49–64Google Scholar

Copyright information

© Springer Japan 2015

Authors and Affiliations

  1. 1.Kobe University Research Institute for Economics & Business Administration (RIEB)KobeJapan

Personalised recommendations