Sumiko Takaoka

Underwriter reputation and switching

The purpose of this paper is to examine the determinants of firms switching the lead underwriter they use to underwrite their first and second public issues of straight corporate bonds in Japan between 1994 and 2002. In particular, the paper focuses on the role of the lead underwriters reputation in determining the degree of switching of underwriters between the first and second issues. As measures of an underwriters reputation, the lead underwriters rating at the time of the initial issue, the changes in the underwriters ratings and market shares between the initial and second issue, and the degree of mispricing of the first issue are used. It is found that the probability of a switch of lead underwriters between the first and second issues is significantly increased if the securities company subsidiary of a bank was the initial lead underwriter, or the rating of the lead underwriter of the initial issue falls. There is some evidence to suggest that lead underwriters who can increase the degree of overpricing of the initial issue are more likely to be chosen to act as the lead underwriter of the second issue.

The matching of lead underwriters and issuing firms in the Japanese corporate bond market

The purpose of this paper is to examine the role of reputation in the matching of lead underwriters and issuing firms in the straight corporate bond market in Japan. While the existing literature already investigates how the issuing firm chooses its lead underwriter at the time of issue, this paper uses successive issues of straight corporate bonds to examine how the matching of lead underwriters and issuing firms changes over time.

Main bank relationships and underwriter choice

We examine why independent securities companies and bank subsidiary securities companies can coexist as underwriters in the Japanese corporate bond market in a period when the main bank system is very important in the Japanese financial system. While it has already been found that lending and shareholding relationships between main banks and issuers are not important determinants of underwriting commissions or yield spreads, they are found to be important determinants of lead underwriter choices. The findings about the impact of main bank relationships on underwriter choices suggest that an issuer with a strong main bank shareholding relationship chooses the main bank subsidiary securities company as the lead underwriter, and is unlikely to choose an independent securities company. An issuer with a larger sized bond issue tends to choose an independent securities company as the lead underwriter for its marketing ability. The findings from four different models consistently support the idea that independent securities companies have an advantage in marketing ability, and the main bank subsidiary securities company has an advantage in the information generated through the main bank relationship.

The impact of migrants on the cross-border M&A: Some evidence for Japan

Japanese outbound M&A activity has been running at a record pace regardless of the exchange rate movements. This paper examines the determinants of Japanese outbound M&A activity and the link between the migrants, which refer to both immigrants and Japanese citizens residing abroad, and Japanese outbound cross-border M&A activity in order to investigate whether immigrants alleviate the informational problems and stimulate the cross-border M&A activity with their host countries. Our results suggest that both immigrant and Japanese citizens residing abroad increase the probability of acquiring the asset in a potential target country. Moreover, both stocks have also a positive effect on the number of outbound M&A deals and the value of outbound M&A deals.

Deregulation of bank underwriting activities: impacts in the Euro-yen and Japanese corporate bond markets

The purpose of this paper is to examine the impact of a 1993 relaxation of the restrictions governing the underwriting operations of Japanese banks on bond issues in the Euro-yen and Japanese corporate bond markets. Evidence is presented to suggest that the relaxation of the restrictions governing the underwriting operations of Japanese banks was associated with a significant fall in spreads in both the Euro-yen and Japanese corporate bond markets.