The Effect of Regulatory Changes for Business Combinations in Japan

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The purpose of this paper is to examine the effect on financial performance of regulatory changes for business combinations in Japan. The examination is focused on research in which 76.3% of M&A (here referring to merger and acquisition which is roughly equivalent to business combinations) companies answered the motivation to develop their core business. This paper also verifies the difference between two management behaviors: expanding core business and separating non-core business. As a general view, it is noted that the regulatory changes in 2001, the revision of Commercial Law and the establishment of Corporate Reorganization Taxation, all contribute to Japanese firms' ability to more easily carry out M&A. I hypothesize about the effect of the deregulations on ROE and DE ratio of 69 transportation equipment companies (mainly related to automobiles), and the difference between companies to strengthen core business (called core companies) and companies to weaken or maintain core business (called non-core companies) after deregulations have been effected. The results indicate that ROE and DE improved after several regulatory changes, and core companies are able to improve ROE and DE in comparison with non-core companies.
関西学院大学の論文