M&A for Value Creation in Japan

The following sections are included:

• Japan Society of Organization and Accounting

• Editorial Board

• Contents

• List of Contributors

The following sections are included:

• Introduction

• The Present Conditions of M&A Accounting in Japan: Stepping toward International Harmonization

• The Revision of the Accounting Standards for Business Combinations:Toward Convergence
  • M&A accounting standards (established in 2003, enforced in 2006)
  • Revised M&A accounting standards (established in 2009, will be enforced in 2010)

• Reexamination of Governance Based on Stockholder Dominance

• Conclusion

• References

The relationship between the parent company and the wholly owned subsidiary was established by Daiichi Pharmaceutical Co., Ltd. and Sankyo Company Limited exchanging stocks with Daiichi Sankyo Company Limited in September, 2005. Daiichi Sankyo Company Limited was obliged to submit Form 4 to the Securities and Exchange Commission (SEC) in June 2005, because the percentage of foreign shareholders of Daiichi Sankyo Company Limited was 32.7%. The purpose of this paper is to examine whether or not the evaluation was reasonable in deciding this share transfer percentage in accounting for goodwill and evaluation of intangible assets from study development. This examination is the first step in establishing the evaluation method in this field.

The following sections are included:

• Introduction

• Earnings Management and Takeovers

• Research Design and Sample Selection
  • Measurement of earnings management
  • Sample

• Results
  • Descriptive statistics
  • Abnormal accruals for acquiring firms around the agreed-on exchange ratio of the merger
  • Abnormal accruals for target firms around the agreed-on exchange ratio of the merger

• Conclusion

• References

The following sections are included:

• Potential Inventory Manipulation

• Discretionary Models and Hypotheses
  • Discretionary accruals: the modified DJ model
  • Discretionary day's inventory

• Assumptions and Hypotheses
  • Assumptions
  • Hypothesis 1: discretionary accruals (DA/S)
    • Null hypothesis 1
  • Hypothesis 2: discretionary day's inventory change (DΔINV/S or DΔINV/C)
    • Null hypothesis 2

• Data and Day's Inventory
  • Data
  • Day's inventory: descriptive statistics

• Results
  • Comparison of the positive ΔCFO Group with the negative ΔCFO Group in the discretionary accruals
  • Comparison of the positive ΔCFO Group with the negative ΔCFO Group in the discretionary day's inventory change based on sales
  • Comparison of a positive ΔCFO Group with a negative ΔCFO Group in the discretionary day's inventory change based on cost of goods sold

• Conclusion

• Acknowledgment

• References

The following sections are included:

• Research Purpose

• What is the Network Organization?
  • Boundaries of the inter-firm network as an open adaptive system

• The Concept that Makes the Network Organization Unique

• Three Roles of the Core Company in a Network Organization

• Strategic Decision No. 1: Selection of Network Participating Companies Through M&A

• Strategic Decision No. 2: Design of Forms of the Inter-Firm Combination
  • Merger
    • Acquisition price as incentive to M&A
    • Control right: origin of synergy effect
  • Placing a company under control as an affiliate
  • Capital alliance
  • Business tie-up (operational alliance)
  • Market transactions

• Design of an Incentive System for the Companies Participating in a Network

• Determination of the Resource Allocation as Task Control : A Case of the Toyota Motor Group

• Notes

• References

The following sections are included:

• Introduction

• Inefficiency of the Stock Market
  • Causes of inefficiency of the market
  • Market inefficiency and knowledge in behavioral finance
    • Efficient market and behavioral finance
    • Knowledge in behavioral finance
  • Cross-shareholding among Japanese firms

• TOB Strategy
  • Determination of TOB price and its effect
  • Strategies for successful TOB

• ATOB Case in Japan

• Concluding Remarks

• References

The following sections are included:

• Introduction

• Trends of Public-to-Private Buy-outs in Japan

• Classification of Public-to-Private Transactions in Japan
  • Divestment type
  • Business succession type
  • Secondary buy-outs
  • Strategic going-private type
  • Protection against hostile takeover type

• Public-to-Private Deals and Financial Package

• Conclusion

• References

The following sections are included:

• Introduction

• The State of the M&A Market in Japan

• Do M&As in Japan Increase Shareholder Value?

• Factors Behind the Value Creation by M&A Activities

• Long-Term Shareholders' Return after M&As in Japan

• Conclusion

• Acknowledgment

• References

The following sections are included:

• Index