Published papers

This study investigates the effects of International Financial Reporting Standards (IFRS) adoption on foreign investment in the Japanese equity market. Previous research suggests that a positive relationship between IFRS adoption and foreign investment typically emerges when a country meets specific conditions, such as a strong regulatory environment or credible improvements in reporting uniformity. We contribute to this literature by re-examining the effects of voluntary IFRS adoption on the foreign shareholding ratio of Japanese companies from 2010 to 2023. Our analysis explicitly controls for the impact of reduced cross-shareholdings and increased share buybacks—structural factors likely to affect the capacity for foreign ownership. Using a difference-in-differences approach combined with propensity score matching to mitigate endogeneity, we compare 168 voluntary IFRS adopters against a control group of non-adopters. Unlike previous studies that reported no significant relationship in Japan—largely attributable to different denominator constructions for foreign shareholding ratios or shorter observation periods—our approach demonstrates that IFRS adoption significantly increases foreign investment over an extended horizon.

This study examines the impact of activist board representation on corporate performance in Japan, the world’s second-largest activist market amid governance system transitions. Activist board representation refers to board seats held by directors whose primary mandate is to serve the interests and strategic objectives of activist investors, often signaling increased pressure on management to implement shareholder-driven changes. Recent trends indicate that hedge funds are increasingly pursuing board representation, reflecting a broader move toward long-term involvement with target firms. In Japan, this trend aligns with governance reforms introduced through the Stewardship Code and the Corporate Governance Code since the mid-2010s, which emphasize institutional investors’ responsibility to enhance corporate value and drive sustainable growth through active engagement. Consequently, the number of activist board members in Japan has risen. Employing a difference-in-differences approach and the Speeda database, this study examines eight cases to compare performance changes between target and control firms. The findings reveal that listed target firms experience improvements in return on equity and return on assets following activist intervention, suggesting a positive influence of activist board representation. However, this effect is not observed in target firms that were delisted post-intervention. This study contributes to the understanding of activist board representation in Japan, highlighting its potential to improve the operating performance of target firms. Nonetheless, the success of such interventions is not always assured, as evidenced by cases of post-intervention delisting.

We study the effect of mergers and acquisitions by Chinese acquirers of Japanese targets (China-Japan M&As) on the firm value. Using the data on China-Japan M&As in 1990-2009, we find that China- Japan M&As show a greater positive effect on stock prices for the targets than for the acquirers. We also observe the following tendencies: 1) the lower the management efficiency of the target is, the greater the market reactions are; 2) a bailout M&A generates greater market reactions for targets than does a non-bailout M&A; 3) capital participation imparts greater market reactions for the target than occur with other forms of M&A; and 4) targets experience smaller market reactions from the subsidiary sales than occur with other forms of M&A.

Purpose Partners are responsible for allocating audit tasks and facilitating knowledge sharing among team members. This study considers changes in the composition of partners to proxy for the continuity of the audit team. This study examines the effect of audit team continuity on audit outcomes (audit quality and report lags), pricing and its determinant (lead partner experience), which have not been thoroughly examined in previous studies. Design/methodology/approach This study employs string similarity metrics to measure audit team continuity. The study employs multivariate panel data regression empirical models to estimate a sample of 26,007 firm-years of listed Japanese companies from 2008 to 2019. Findings The study reveals that audit team continuity is negatively associated with audit fees, regardless of the auditor’s size. This finding contributes to the existing literature by showing that audit team continuity represents one of the determinant factors of audit fee. For clients of large audit firms, companies with higher (lower) audit team continuity issue audit reports in less (more) time. The experience of lead partners is a strong predictor of audit team continuity, irrespective of audit firm size. Audit quality is not associated with audit team continuity for either large or small audit firms. Originality/value This study proposes and examines audit team continuity measures that employ string similarity metrics to quantify changes in the composition of partners in consecutive audit engagements. Audit team continuity expands upon the tenure of individual audit partners, which is commonly used in prior literature as a measure of client–partner relationships.

This paper investigates the conditions under which a large creditor offers refinancing to a debtor firm and examines how that refinancing affects the decisions of the debtor firm and other creditors. We develop a model of a coordination game in which the actions of multiple creditors and the debtor firm are determined interdependently of each other. We find that refinancing can be beneficial for the large creditor only when the debtor firm faces a substantial, but not hopeless, risk of default. Whether the refinancing succeeds in preventing the default caused by the coordination failure, or gives rise to moral hazards of the debtor firm, depends on how poor the fundamentals of the debtor firm are. Another finding is that the size of the refinancing tends to be larger in cases where prior lending by a large creditor was greater, resulting in more serious debtor moral hazard. © 2005 Inderscience Enterprises Ltd.

This paper investigates stock price reactions to Japan fs popular TV program gProject X,h which was broadcast on NHK between 2000 and 2005. @By using a standard event study methodology, we found that stock prices of these companies increased on average after the broadcast. In particular, the programs focusing on product development and marketing tended to raise stock prices.

This paper investigates how trade of "dirty" goods with the USA can affect the environmental pollution in Latin American (LA). By controlling for trade openness, the share of manufacturing in GDP, and the trade of pollution-intensive products with USA, CO2 emissions are estimated for 14 LA countries between 1986 and 1999. Our results show that increasing exports of "dirty" products to the USA tends to raise CO2 emissions in LA countries, while the opposite results occur for growing imports of those goods from the USA. Since the effect of "dirty" imports from the USA is larger than the effect of "dirty" exports to the USA, our results indicate that the trade of "dirty" products with the USA on the whole reduces CO2 emissions in LA countries during the estimation period.

This study investigated the effects of eSports sponsorship announcements on the market value of Japanese sponsoring companies and changes in such effects since the COVID-19 outbreak. We calculated the buy-and-hold abnormal returns around the release date of the sponsorship agreements and performed a multivariate regression analysis to examine what factors affect market reactions to eSports sponsorships. Results indicated that market reactions to eSports sponsorship announcements were not significantly different from zero, based on 72 eSports sponsorship contracts announced in Japanese newspapers from 2015 to 2021. However, investors reacted more positively to eSports sponsorship announcements during the COVID-19 pandemic, leading more people to play eSports at home and pay attention to in-game advertising. The positive effects are intensified when sponsors are engaged in eSports-related businesses. Whereas previous studies employed surveys and experiments, this study examined the economic effects of sponsorship contracts on eSports using objective quantitative indicators.

The evolving literature on using Twitter to capture investor sentiment suggests that stock market performance is linearly associated with Twitter's public mood. We investigate whether investor sentiment determined by the Twitter sentiment index (TSI) has a nonlinear predictive power for stock market behaviour. Using a dataset of seven US stock markets, we apply the cointegration techniques to show the relationship between Twitter sentiment and stock market behaviour. The results suggest a dynamic nonlinear cointegrating relationship. During the short run, Twitter happiness has a substantial effect on stock market indices, while in the long run, it has a moderating effect. Twitter happiness has a dominant effect on the US stock market indices than unhappy Twitter. These results highlight Twitter's growing role in predicting the stock market behaviour and show that the TSI acts as a better predictor of investor sentiment.

This study investigates how proxy advisory companies’ recommendations affect the stock prices of target companies in Japan, whose governance system has been under transition from relationship-based to more market-based. Based on 125 voting recommendations reported in newspapers between 2003 and 2022, we find that stock prices respond to recommendations inconsistent with the board's policy more largely than to those consistent. The market reactions become larger when firms are smaller and/or have a higher shareholding ratio of foreign investors, when recommendations are against takeover defense measures, and when the firms’ name attracts investor attention.

In this study, we examine the short-term stock price reactions of Japanese gaming companies to events related to the coronavirus disease 2019 (COVID-19) pandemic. Using the event study method, we first estimate stock price reactions to the outbreak of the pandemic and the declaration of a state of emergency. We then perform multivariate regressions to investigate the factors affecting market responses. Our results demonstrate that the stock prices of Japanese gaming companies reacted negatively to the outbreak of the COVID-19 pandemic, and the initial negative effects were greater for mobile gaming companies and for companies with small sizes or low Tobin’s Q. By contrast, the market has reacted positively to the declaration of the state of emergency, which perhaps drove more people to play games at home.