Is Japanese management superior? Evidence from the performance of the USA targets in partial acquisitions

This paper examines the efficacy of Japanese management and corporate governance by comparing the long-term post-merger operating performance of the U.S. targets acquired by Japanese bidders compared to the performance of well-matched U.S. targets of U.S. bidders. Unlike prior studies that focus on short-term stock price reactions of target firms, it is possible to undertake this long-term analysis of performance by identifying targets that survive as independent entities because of partial acquisitions. The findings suggest that targets of Japanese bidders either perform no differently from targets of U.S. bidders, or possibly even underperform. Thus, the evidence does not support the oft-claimed superiority of Japanese management and corporate governance system.