The Acquirer and the Performance of Targets in Partial Acquisitions: The Case of Japanese Acquisitions in the U.S., 1980-2000

摘要

We extend the existing literature on the factors explaining the value of acquired firms by examining the effect of corporate governance and other characteristics of Japanese and U.S. acquirers on the long-term post-acquisition stock and accounting performance of their U.S. targets over 1980 - 2000, a period during which both U.S. and Japanese economies experienced both superior and poor performances. In addition to analyzing the bidder - target relationship in general, focus on Japanese bidders permits us to investigate the role of unique Japanese characteristics: keiretsu membership, cross-holding and ties to a main bank. The unresolved debate on the efficiency of the U.S. versus Japanese corporate governance system developed in the early 1990s, following the slowdown in the U.S. and boom in the Japanese economy. Critics claim that the main banks do nothing special and that the whole discussion is theory driven. In addition, the hypothesized advantages of the Japanese governance system, namely cross-holding, negligible shareholding, latitude and long-term focus of managers, may lead to greater agency problems. For data availability reason we analyzed U.S. targets whose stock continued to independently trade for at least a year following the acquisition. To separate general and uniquely Japanese effects of bidders, a sample of U.S. targets, that independently existed following acquisition by U.S. bidders, were selected from the same industry and year in which Japanese acquired U.S. targets. Overall results suggest that better managed bidders with more resources positively affect the performance of smaller targets in related industries. In the presence of alternative methods for managing the agency problem the targets' leverage becomes more important as a source of funds than a tool to manage agency problem.The mixed results for the Japanese governance variables, expected positive for the main bank and unpredicted negative for the keiretsu and cross-holding, do not allow a clear-cut answer as to which governance system is dominant since the characteristics of the Japanese governance system have mixed effects on the corporate performance.