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Does Restructuring Pay in Japan? Evidence Following the Lost Decade

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Listed:
  • Beason, Dick
  • Gordon, Ken
  • Mehrotra, Vikas
  • Watanabe, Akiko

Abstract

After a decade of sluggish economic growth in the 1990s, it remains an open question whether and how Japanese firms have restructured their operations, and whether these efforts have borne any fruit. Using a randomly selected sample of 300 firms from the Tokyo Stock Exchange, we collect all restructuring announcement in the 2001-2002 period. Our results are striking in that while we do find that firms engaging in restructurings of various sorts display improved earnings in the period following the restructuring announcement, shareholders do not appear to benefit from such tangible earnings improvements. After a decade of lost opportunities, market participants in Japan remain skeptical of the sustainability of such restructuring efforts (that is, will the firms revert to their "bad old ways" when the immediate crisis is over).

Suggested Citation

  • Beason, Dick & Gordon, Ken & Mehrotra, Vikas & Watanabe, Akiko, 2008. "Does Restructuring Pay in Japan? Evidence Following the Lost Decade," CEI Working Paper Series 2008-16, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2008-16
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    References listed on IDEAS

    as
    1. Richard Beason, 1992. "Intertemporal Substitution and Labor Supply in Japan," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 511-5330.
    2. Kang, Jun-Koo & Shivdasani, Anil, 1997. "Corporate restructuring during performance declines in Japan," Journal of Financial Economics, Elsevier, vol. 46(1), pages 29-65, October.
    3. Chen, Peter & Mehrotra, Vikas & Sivakumar, Ranjini & Yu, Wayne W., 2001. "Layoffs, shareholders' wealth, and corporate performance," Journal of Empirical Finance, Elsevier, vol. 8(2), pages 171-199, May.
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    More about this item

    Keywords

    Japanese corporate restructuring; restructuring announcements;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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