Keiretsu affiliation and equity values in Japan

This study examines the association between keiretsu affiliation and corporate equity value in Japan. We hypothesize that, ceteris paribus, keiretsu firm value, measured as Tobins Q, is higher than non-keiretsu firm value, reflecting the improved or active monitoring role of the keiretsu arrangement. The empirical tests are supportive after controlling for other financial and ownership variables. The results also show that keiretsu firm value is positively related to the strength of the keiretsu. This is additional evidence that the monitoring provided by the keiretsu relationship does indeed increase corporate equity value, and that the source of the increase in value is not merely a result of cross-shareholding, but inherent to the keiretsu arrangement. However, the effect of keiretsu membership and influence on market equity values has apparently diminished since 1990 (the post-market crash period in Japan). ? World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research.
Publisher
World Scientific Publishing Co
Issue Date
2004-12
Language
ENG
Citation

REVIEW OF PACIFIC BASIN FINANCIAL MARKETS AND POLICIES, v.7, no.4, pp.525 - 545

ISSN
0219-0915
URI
http://hdl.handle.net/10203/4070
Appears in Collection
MT-Journal Papers(저널논문)
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