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Banks, Ownership Structure, and Firm Value in Japan

Randall Morck, Masao Nakamura and Anil Shivdasani
The Journal of Business
Vol. 73, No. 4 (October 2000), pp. 539-567
DOI: 10.1086/209654
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Page Count: 30
Subjects: Finance Business
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Banks, Ownership Structure, and Firm Value in Japan
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We investigate the relation between firms' ownership structures and q ratios in Japan. At low levels of ownership by main banks, firms' q ratios fall as bank equity ownership rises. At higher levels of bank ownership, this relationship is mitigated and, in some specifications, even reversed. We argue that this relation reflects both costs and benefits of equity holdings by banks. In Japan, unlike the United States, firm value rises monotonically with increased managerial ownership. Equity ownership by corporate blockholders is also positively related to firm value in Japan.