The effects of bank relations on stock repurchases : evidence from Japan
This paper examines the effects that bank relations have on stock repurchases in Japan. Similar to US evidence, we find that stock repurchase announcements in Japan have positive announcement period returns. Announcement returns are positively related to equity ownership by main banks, but are negat...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2014
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| Online Access: | https://hdl.handle.net/10356/100785 http://hdl.handle.net/10220/18457 |
| _version_ | 1826127398509215744 |
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| author | Kang, Jun-Koo Nishikawa, Takeshi Kim, Kenneth A. Kitsabunnarat-Chatjuthamard, P. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Kang, Jun-Koo Nishikawa, Takeshi Kim, Kenneth A. Kitsabunnarat-Chatjuthamard, P. |
| author_sort | Kang, Jun-Koo |
| collection | NTU |
| description | This paper examines the effects that bank relations have on stock repurchases in Japan. Similar to US evidence, we find that stock repurchase announcements in Japan have positive announcement period returns. Announcement returns are positively related to equity ownership by main banks, but are negatively related to nonbank debt ratios. In contrast, bank debt ratios do not have such a negative relation. Announcement returns are also negatively related to future growth opportunities, suggesting that repurchase announcements are greeted more positively by investors when repurchasing firms have lower growth opportunities. We also find that firms with high leverage are less likely to repurchase stocks, whereas firms with high equity ownership by main banks are more likely to do so. Overall, these results are consistent with the views that banks, particularly main banks, are effective monitors of agency costs and financial distress risk, and that their presence as dual stakeholders are value-enhancing. |
| first_indexed | 2024-10-01T07:07:54Z |
| format | Journal Article |
| id | ntu-10356/100785 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T07:07:54Z |
| publishDate | 2014 |
| record_format | dspace |
| spelling | ntu-10356/1007852023-05-19T06:44:42Z The effects of bank relations on stock repurchases : evidence from Japan Kang, Jun-Koo Nishikawa, Takeshi Kim, Kenneth A. Kitsabunnarat-Chatjuthamard, P. Nanyang Business School DRNTU::Business::Finance::Stock exchanges This paper examines the effects that bank relations have on stock repurchases in Japan. Similar to US evidence, we find that stock repurchase announcements in Japan have positive announcement period returns. Announcement returns are positively related to equity ownership by main banks, but are negatively related to nonbank debt ratios. In contrast, bank debt ratios do not have such a negative relation. Announcement returns are also negatively related to future growth opportunities, suggesting that repurchase announcements are greeted more positively by investors when repurchasing firms have lower growth opportunities. We also find that firms with high leverage are less likely to repurchase stocks, whereas firms with high equity ownership by main banks are more likely to do so. Overall, these results are consistent with the views that banks, particularly main banks, are effective monitors of agency costs and financial distress risk, and that their presence as dual stakeholders are value-enhancing. Accepted version 2014-01-13T04:07:27Z 2019-12-06T20:28:12Z 2014-01-13T04:07:27Z 2019-12-06T20:28:12Z 2011 2011 Journal Article Kang, J. K., Kim, K. A., Kitsabunnarat-Chatjuthamard, P., & Nishikawa, T. (2011). The effects of bank relations on stock repurchases: Evidence from Japan. Journal of Financial Intermediation, 20(1), 94-116. 1042-9573 https://hdl.handle.net/10356/100785 http://hdl.handle.net/10220/18457 10.1016/j.jfi.2010.06.001 en Journal of financial intermediation © 2010 Elsevier Inc. This is the author created version of a work that has been peer reviewed and accepted for publication by Journal of Financial Intermediation, Elsevier Inc. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [http://dx.doi.org/10.1016/j.jfi.2010.06.001]. 23 p. application/pdf |
| spellingShingle | DRNTU::Business::Finance::Stock exchanges Kang, Jun-Koo Nishikawa, Takeshi Kim, Kenneth A. Kitsabunnarat-Chatjuthamard, P. The effects of bank relations on stock repurchases : evidence from Japan |
| title | The effects of bank relations on stock repurchases : evidence from Japan |
| title_full | The effects of bank relations on stock repurchases : evidence from Japan |
| title_fullStr | The effects of bank relations on stock repurchases : evidence from Japan |
| title_full_unstemmed | The effects of bank relations on stock repurchases : evidence from Japan |
| title_short | The effects of bank relations on stock repurchases : evidence from Japan |
| title_sort | effects of bank relations on stock repurchases evidence from japan |
| topic | DRNTU::Business::Finance::Stock exchanges |
| url | https://hdl.handle.net/10356/100785 http://hdl.handle.net/10220/18457 |
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