Shareholders' Wealth, Bank Control, and Large Shareholders: An Analysis of Japanese Mergers

This study analyzes 89 domestic mergers in Japan during 1981 to 1998. Japanese mergers are associated with negative announcement period abnormal returns. We find an average -1.01% 3-day cumulated abnormal returns around the initial announcement. Announcement returns are adversely related to the large financial shareholding, particularly by bank shareholding. Bank relation as creditors is not enhancing the bidders' shareholder wealth. In general, Japanese corporate cross-shareholding failed to monitor firms in a manner that maximizes shareholder wealth; however, financial institutional shareholders are behaving more active during the 1990s period.