Foreign Ownership and Firm Value in Japan

Kwangwoo Park

No 2002-15, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: I examine the relation between Tobin's Q and the structure of foreign equity ownership for a sample of 945 industrial firms listed in the 1st Section of the Tokyo Stock Exchange. I find evidence of significant curvilinear relation between Q and the fraction of common stocks owned by foreigners in Japan. Q rises until foreign ownership reaches approximately 40% to 45%, then falls back. It appears that, in Japan, foreign institutional investors are good monitors, and foreign industrial firms increase their stakes after firms showing poor operating performance. I also find that R&D intensity and foreign ownership have weaker but a similar pattern of concave nonlinear relationship in Japan. Future research will add variables like foreign CEO appointments and the fraction of foreign members serving in the board, and examine how these variables can affect firm value in Japan.

Keywords: Foreign Ownership; Firm Value; Tobin's Q; Japan (search for similar items in EconPapers)
JEL-codes: G30 G32 K22 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2002-09
Note: First Version: January 11, 2001; This Version: June 18, 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2002-15

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