Exact Dynamics of the SU(K) Haldane-Shastry Model

The dynamical structure factor $S(q,\omega)$ of the SU(K) (K=2,3,4) Haldane-Shastry model is derived exactly at zero temperature for arbitrary size of the system. The result is interpreted in terms of free quasi-particles which are generalization of spinons in the SU(2) case; the excited states relevant to $S(q,\omega)$ consist of K quasi-particles each of which is characterized by a set of K-1 quantum numbers. Near the boundaries of the region where $S(q,\omega)$ is nonzero, $S(q,\omega)$ shows the power-law singularity. It is found that the divergent singularity occurs only in the lowest edges starting from $(q,\omega) = (0,0)$ toward positive and negative q. The analytic result is checked numerically for finite systems via exact diagonalization and recursion methods.Comment: 35 pages, 3 figures, youngtab.sty (version 1.1

Relationship Banking in post Bubble Japan: Co-existence of soft-and hard budget constraint

The purpose of this paper is to provide an overview of the relationship banking in Japan in the 1990s. We show the increasing dependence on bank borrowing in spite of the deregulation of bond market in the mid 1990s in terms of the debt composition, and we confirm the loan from main-bank also increases among the firms with higher bank borrowing. Then, we examine the effects of these facts on borrowing firm behavior. By estimating the employment adjustment function, we present that main bank did not discipline effectively firms that were required the corporate restructuring, while it encouraged the restructuring of the firm with relatively better performance.

The Adoption of Poison Pills and Managerial Entrenchment: Evidence from Japan

The purpose of this paper is to examine the effect of poison pills on shareholder wealth using cases of Japanese firms that announced the adoption of poison pills between April 2005 and May 2006. We find that announcements of poison pill defenses reduce shareholder wealth by a significant amount. We also investigate the relationship between this negative stock price response to poison pills and a manager's incentive for entrenchment, using conditional event study methods. We confirm that the probability of adopting poison pills is higher if CEOs have longer tenure or smaller shareholdings. In such cases, we find that the stock price responds negatively when the performance of the firm is poor because pill adoptions deliver a signal that reveals to investors the manager's tendency toward entrenchment.

Understanding the M&A boom in Japan: What drives Japanese M&A?

In this paper, we examine the causes of the first merger boom since the late 1990s in Japan. Using industry-level data, we show that mergers and acquisitions (M&As) are driven mainly by economic shocks. While industries with higher growth opportunities are likely to have more M&A activity, industries facing negative fundamental shocks, such as rapid sales declines, also experience larger M&A deals. These results suggest that the recent merger wave in Japan is mainly explained by the neoclassical model. At the firm level, we find that the bidder is the firm with the higher growth opportunity, and the target is the one with the lower growth opportunity. This means that Japanese firms improved their efficiency through merger activity since the 1990s. Lastly, we find that internal funds for the acquiring firm play a very important role in bidding activity, while a high probability of being targeted for M&A is associated with high leverage.

Cross Shareholding and Initiative Effects

Cross shareholding that makes takeovers difficult is not necessarily harmful to shareholders due to initiative effects. As long as manager's private benefits are to some extent in line with shareholders' benefits, cross shareholding may benefit shareholders. Cross shareholding is more likely to occur as the congruence of interests between managers and shareholders rises, the manager's private benefits becomes greater, the manager's reservation utility gets lower, and shareholders' pie in the case of a takeover becomes smaller. Due to a lack of monitoring, the corporate value of a firm tends to be smaller in cross shareholding. However, if we include managers' private benefits in social welfare function, it is possible that the social welfare is higher in cross shareholding.

The Choice between Public and Private Debt by Japanese Firms

The purpose of this paper is to investigate the choice of corporate financing between public and private debt. Focusing on the drastic change of financing pattern during the period of financial liberalization from the mid 1980s to the mid 2000s, this paper examines what factors determine the demand for public and private debt. We find that the growth opportunity and default risk of the issuing firm are the main determinants of the debt choice in this period

Debt, Ownership Structure, and R&D Investment: Evidence from Japan

Financial factors and ownership structure are both part of the determinants of corporate R&D investment. Considering listed firms in the R&D intensive industries during the 2000s, this paper examines whether financial factors and ownership structure explain R&D investment in Japan. Following the methodology of Brown et al. (2009), which extends the dynamic investment model of Bond and Maghir (1994) to R&D investment, we find that only small, young firms mainly listed on new emerging markets face financial constraints. We also find that large firms finance R&D investment partly from debt. For firms with relatively limited assets, however, higher leverage leads to lower R&D investment. Finally, we find no evidence that large shareholdings by foreign investors enforce myopic behavior on firms in R&D intensive industries.