Restructuring In Japan Research Articles

Japan's Digital Economy: A Way Forward for Economic Revivalism

The term "digital economy" refers to a variety of commercial and economic activities that rely on electronic communications and technology such as e-commerce and digital marketing. This trend promotes innovation and allows small and medium-sized businesses to penetrate global markets with little expenditure. Furthermore, digital data from online interactions provides insights into consumer behaviour, which helps with marketing tactics and product development. Despite Japan's technological legacy, difficulties such as an ageing population and economic stagnation need the use of digital breakthroughs to stimulate growth. Empirical study demonstrates that the digital economy has a positive impact on industry restructuring in Japan. Regional disparities highlight the importance of specialized solutions, with government involvement critical, particularly in places lacking digital development. Future success is contingent on investments in talent and technology. Japan may achieve long-term economic development by adopting the digital economy and investing in human capital. As technology advances, Japan must adapt and innovate to remain competitive on the global stage. This necessitates continual research and development investments, as well as the promotion of an entrepreneurial and digital literate culture. Japan can solve its economic woes by harnessing its technology expertise and embracing digital transformation.

The decline in bank-led corporate restructuring in Japan: 1981-2010

Using a unique dataset on all major corporate restructuring events in Japan between 1981 and 2010, we assess changes in the role of the main bank in guiding corporate turarounds, and the economic consequences of these changes for distressed firms. We identify firms in distress among all listed firms based on accounting data, and we separately identify firms undergoing corporate restructuring based on a newspaper search for the Japanese term “saiken”. Even though the ratio of distressed firms has not declined, the incidence of saiken restructuring by such firms has become less frequent after the 1990s, indicating a decline in the governance and rescue role of the main bank. When firms undergo saiken, they adopt real adjustments in terms of labor, assets and finance. While the intensity of these adjustments has also declined over time, saiken firms make more significant adjustments than distressed firms that do not undergo restructuring. The role of saiken was an important part of corporate renewal in Japan, and it has declined. In line with existing research, these findings underscore changes in Japanese corporate governance, in particular regarding the decline of the monitoring and restructuring function of the main bank.

わが国における産業構造の転換と物流の変化 : 運輸・物流政策の変遷との関係を中心として

わが国における産業構造の転換と物流の変化 : 運輸・物流政策の変遷との関係を中心として

Municipal sizes and municipal restructuring in Japan

In this article, we quantitatively analyze changes in the size distribution of municipal jurisdictions in Japan by using their rank-size distribution to capture the changes. In Japan, the central government sometimes enacts large-scale municipal mergers, aimed at creating municipalities of a certain size. Japan’s local governance policy allocates tax revenues to municipalities based on the financial shortages of each municipality, which is designed to ensure financial equality among municipalities so that the central government can evenly maintain public services, especially in rural areas. Thus, if the central government eases population discrepancy among municipalities and creates a large number of uniformly sized municipalities, then the central government can reduce subsidies to local governments. The government’s previous policies on municipal mergers were enacted to foster this sort of efficiency. We examine changes in the distribution of municipal jurisdiction sizes to determine the actual effect of municipal merger policies. We obtain the result that the great municipal mergers of the 1950s Showa era made the municipalities more equal in size, which shows that the Municipality Merger Promotion Law of 1953 had an impact on the change of the size distribution of municipalities.

The development of multiple establishment of major advertising agencies and its restructuring in Japan

The development of multiple establishment of major advertising agencies and its restructuring in Japan

Restructuring Japan’s Rustbelt

The crisis of Japan’s political economy raises the question of how it has dealt with the restructuring of its peripheral industrial regions, and the degree to which it has embraced neoliberal policies. I argue that the spread of neoliberalism in Japan has been uneven, shaped by local settings and adopted only selectively. To make this case, the article focuses on restructuring in Muroran City (2010 population, 94,600), a city of steel and heavy industry that lies on the southern coast of Hokkaido. I examine the changing fortunes of Muroran over the 1985-2010 period based upon a number of site visits made in the last 25 years or so. Set against contemporary industrial restructuring in Japan, the article evaluates the actions of the city’s major employer (Nippon Steel Corporation), central government ministries, and programs of the City of Muroran. The results show that despite the rise of the neoliberal rhetoric in Japan, restructuring in Muroran reflected a commitment to manufacturing and the local workforce by corporate as well as central and local governments.

Post-restructuring performance in Japan

Peek and Rosengren (2005) showed that after the end of the bubble economy era in Japan, regulatory forbearance and perverse incentives allowed Japanese banks to engage extensively in “evergreening”. Inoue et al. (2008) also showed that, compared to out-of-court settlements in the United States, agreements on out-of-court restructuring are attained more easily in Japan. However, widespread forbearance by banks and affiliated companies in addressing the needs of distressed firms indicated a serious weakness of banks and affiliated companies in instituting discipline. This is the first empirical study to examine the performance of Japanese firms that experienced out-of-court restructuring in Japan from January 1990, when the bubble economy burst, to March 2005, when the Koizumi Cabinet declared the bad debt problems of major firms to be resolved. Our results show that important biases permitted deeply unprofitable firms to survive in Japan. This finding is similar to research by Hotchkiss (1995), who analyzed post-restructuring performance in the United States. We also find that out-of-court restructurings of troubled firms in Japan were less effective in improving profitability than restructurings under Chapter 11 in the United States. However, we find that restructurings associated with new capital injections and new outside management are more likely to lead to genuine improvement in financial performance.

The Emergence of Portfolio Restructuring in Japan

We examine the role of stakeholders as an influence in the practice of portfolio restructuring. We contend that with the presence and creation of new legal arrangements and regulations, portfolio restructuring achieved widespread usage, but only when the initiatives were consistent with the interests of the most powerful social actors in a firm. Building on a stakeholder power approach to corporate governance, we examine whether the interests of relational banks, managers, and business groups were consistent with the practices of portfolio restructuring we observed in Japanese firms in the 1998 to 2005 period. Regressions using data on 174 Japanese machinery firms lend support to predictions that portfolio restructuring increases in frequency with the extent to which business groups’ strategies are facilitated and decreases with the degree to which banks’ interests are protected. The association between the frequency of portfolio restructuring and managerial interests depends on the level of managerial ownership.

Corporate restructuring in Japan: Who monitors the monitor?

Peek and Rosengren [Peek, J., Rosengren, E., 2005. Unnatural selection: Perverse incentives and the misallocation of credit in Japan. American Economic Review 95, 1144–1166] showed that, when the bubble economy era ended, regulatory forbearance and perverse incentives allowed Japanese banks to engage extensively in evergreening. This is the first comprehensive study to empirically analyze the economics of private debt restructurings of financially distressed companies in Japan, where the corporate monitoring mechanism is not market based but large-stakeholder based – typically, banks and affiliated companies. These stakeholders are expected to efficiently resolve potential bankruptcy or collapse with better information resulting from long-term relationships with the distressed firms. Our study, however, finds that private restructurings led by them failed because of delays in implementing fundamental solutions. Forbearance in addressing the needs of distressed firms demonstrates the weakness of such stakeholders in instituting discipline, hence the need for a system to “monitor the monitor”.

Corporate Restructuring in Japan: Who Monitors the Monitor?

This is the first comprehensive study to empirically analyze the economics of private (out-of-court) debt restructurings of financially distressed Japanese companies spanning the period from the burst of the bubble economy of Japan in 1990 to the time when the excessive bad debt problems of major firms were recognized as resolved in March 2005 on the basis of the stock prices of more than 200 restructurings. In Japan the mechanism of corporate monitoring is not market based (shareholder and public bondholder based) but large-investor based (large stakeholder based)typically, banks and affiliated companies. These stakeholders are expected to efficiently resolve potential bankruptcy or collapse with better information resulting from their long-term relationship with the distressed firms. In contrast, however, this study finds that out-of-court restructurings led by banks or affiliated companies failed to gain the trust of the market because of their procrastinations in implementing fundamental solutions; and therefore, there is a need for third-party monitoring. Compared to the analysis of out-of-court settlements in the United States by Gilson et al. (1990), this study finds that agreements on out-of-court restructuring in Japan are attained more easily than in the United States. However, without third-party mediation, no fundamental changes can be expected from the restructurings. This forbearance by banks and affiliated companies in addressing the needs of distressed firms indicates the weakness of banks and affiliated companies in instituting discipline among themselves, thereby showing the importance of instituting a system to monitor the monitor.

Zombie Lending and Depressed Restructuring in Japan

Large Japanese banks often engaged in sham loan restructurings that kept credit flowing to otherwise insolvent borrowers (which we call zombies). We examine the implications of suppressing the normal competitive process whereby the zombies would shed workers and lose market share. The congestion created by the zombies reduces the profits for healthy firms, which discourages their entry and investment. We confirm that zombie-dominated industries exhibit more depressed job creation and destruction, and lower productivity. We present firm-level regressions showing that the increase in zombies depressed the investment and employment growth of non-zombies and widened the productivity gap between zombies and non-zombies. (JEL G21, G32, L25)

Zombie Lending and Depressed Restructuring in Japan

In this paper, we propose a bank-based explanation for the decade-long Japanese slowdown following the asset price collapse in the early 1990s. We start with the well-known observation that most large Japanese banks were only able to comply with capital standards because regulators were lax in their inspections. To facilitate this forbearance the banks often engaged in sham loan restructurings that kept credit flowing to otherwise insolvent borrowers (that we call zombies). Thus, the normal competitive outcome whereby the zombies would shed workers and lose market share was thwarted. Our model highlights the restructuring implications of the zombie problem. The counterpart of the congestion created by the zombies is a reduction of the profits for healthy firms, which discourages their entry and investment. In this context, even solvent banks do not find good lending opportunities. We confirm our story's key predictions that zombie-dominated industries exhibit more depressed job creation and destruction, and lower productivity. We present firm-level regressions showing that the increase in zombies depressed the investment and employment growth of non-zombies and widened the productivity gap between zombies and non-zombies.

Dividend Pay-Outs and Leverage in Japanese Firms

Through an analysis of the use of leverage and dividend policy by Japanese companies, we came to the conclusion that the strategy that directed them regarding the agency theory cost levels incurred was not neutral. The theoretical implications of the agency theory allowed us to express several hypotheses that we tested on a wide sample of Japanese firms listed on the Tokyo Stock Exchange. Owing to considerable restructuring in Japan at that time, the difference between keiretsu and non-keiretsu firms was also investigated. In the empirical part of this paper, we show some clear differences between firms located within the influence area of the horizontal groups (keiretsu) and those outside it. Indeed, the outside companies showed a leverage rate significantly lower than the others, and a slightly lower pay-out ratio. As for firms belonging to keiretsu, no difference regarding leverage levels was noted, but there was a slight tendency for firms belonging to former zaibatsu heirs to pay lower dividends than companies belonging to other horizontal groups. Moreover, leverage and dividend policy appeared to be ways of reducing agency costs. Evidence showed that these means were more substitutive than complementary, since our results showed a negative relationship between leverage and pay-out ratio.

The Development of Financial Restructuring in Japan, Making Use of the Assumption Company Stragegy

The Development of Financial Restructuring in Japan, Making Use of the Assumption Company Stragegy

A THEORY OF DEBT DISORGANIZATION

Journal of Restructuring FinanceVol. 01, No. 01, pp. 1-11 (2004) ARTICLESNo AccessA THEORY OF DEBT DISORGANIZATIONKEIICHIRO KOBAYASHIKEIICHIRO KOBAYASHIResearch Institute of Economy, Trade and Industry, Japan Search for more papers by this author https://doi.org/10.1142/S0219869X04000020Cited by:5 PreviousNext AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack CitationsRecommend to Library ShareShare onFacebookTwitterLinked InRedditEmail AbstractThere were three anomalies in Japan in the 1990s: low output growth, declining asset prices, and widespread rollover of bad loans. In this paper, a model of multiple equilibria is presented in which these three anomalies emerge when too many firms become insolvent simultaneously as a result of a macroeconomic shock, such as a collapse of an asset-price bubble. A key factor is the role of debt contract as a commitment device for a debtor. Once a bad debt is rolled over, the debtor firm's commitment becomes untrustworthy, and the transactions among firms are disorganized. It is also shown that banks rationally roll over bad loans if too many insolvencies occur simultaneously.Keywords:Non-performing loanszombie companiescoordination failuredivision of laborJEL Classification: D21JEL Classification: G12JEL Classification: G20JEL Classification: G33 References G. S. Becker and K. M. Murphy, Quarterly Journal of Economics 107(4), 1137 (1992), DOI: 10.2307/2118383. Crossref, Google ScholarE. Berglöf and G. Roland, European Economic Review 41, 807 (1997). Crossref, Google ScholarB. S. Bernanke and M. Gertler, American Economic Review 79, 14 (1989). Google ScholarO. Blanchard and M. Kremer, Quarterly Journal of Economics 112(4), 1091 (1997), DOI: 10.1162/003355300555439. Crossref, Google Scholar R. J. Caballero , T. Hoshi and A. K. Kashyap , Zombie lending and depressed restructuring in Japan ( Mimeo , 2003 ) . Google ScholarD. Gale and M. Hellwig, Review of Economic Studies 52(4), 647 (1985). Crossref, Google ScholarN. Kiyotaki and J. Moore, Journal of Political Economy 105, 211 (1997), DOI: 10.1086/262072. Crossref, Google Scholar Kobayashi, K and M Inaba (2003). Debt disorganization in Japan. Japan and the World Economy (forthcoming) . Google Scholar Mitchell, J (1998). Strategic creditor passivity, regulation and bank Bailouts. CEPR Discussion Paper 1780, Centre for Economic Policy Research . Google Scholar Smith, A (1776). An Inquiry into the Nature and Causes of the Wealth of Nations . Google Scholar FiguresReferencesRelatedDetailsCited By 5Incident Management Process Capability: A Simulation StudyGoutam Kumar Kundu, B. Murali Manohar and Jayachandra Bairi1 Jan 2012LEAPCON: Simulation of Lean Construction of High-Rise Apartment BuildingsR. Sacks, A. Esquenazi and M. Goldin1 Jul 2007 | Journal of Construction Engineering and Management, Vol. 133, No. 7Evaluating the effect of construction process characteristics to the applicability of lean principlesJay Yang and Abdulsalam A. Al‐Sudairi23 Jan 2007 | Construction Innovation, Vol. 7, No. 1Payment uncertainty, the division of labor, and productivity declines in great depressionsKeiichiro Kobayashi1 Oct 2006 | Review of Economic Dynamics, Vol. 9, No. 4Debt disorganization in JapanKeiichiro Kobayashi and Masaru Inaba1 Apr 2005 | Japan and the World Economy, Vol. 17, No. 2 Recommended Vol. 01, No. 01 Metrics History KeywordsNon-performing loanszombie companiescoordination failuredivision of laborJEL Classification: D21JEL Classification: G12JEL Classification: G20JEL Classification: G33PDF download

Middle Managers, the New Organizational Ideology and Corporate Restructuring: Comparing Japanese and Anglo-American Management Systems

Middle managers are facing major workplace pressures in an era of widespread corporate and public sector restructuring in Japan, USA and UK. This paper, based on interviews with senior/HR managers and middle managers in 30 large organizations, suggests that middle managers today face heavy workloads and limited promotion prospects. More significantly, the central task of middle management is changing from managing subordinates in hierarchies towards managing projects in flattened organizations. These changes are in accordance with a new organizational ideology that continues to influence change in public and private organizations in co-ordinated or free market economies. While this ideology has spread rapidly, it has not managed to achieve hegemony. Organizations can be difficult to change and bureaucratic elements will persist despite the changes. The Japanese co-ordinated model and the US and UK free market model are both subject to similar pressures, but the actual organizational changes work themselves out in different ways because of differing institutional arrangements.

Corporate Restructuring in Japan Part I: Can M-Form Organization Manage Diverse Businesses?

The purpose of this paper is to examine the recent organizational restructuring in Japan in the framework of organizational economics, assuming that the product/market portfolio of the firm is fixed. How does a firm set about organizing its internal divisions? I first summarize some stylized facts on corporate diversification strategy and multi-divisional (M-form) organization in large Japanese firms from different perspectives. I then analyse the problem of choosing an organizational form. In particular, I argue that, precisely because of its related diversification, the multi-business Japanese firm adopting the M-form finds it difficult to differentiate its diverse businesses internally.

Restructuring in Japan

Restructuring in Japan

Macro Effects of Corporate Restructuring in Japan

Macro Effects of Corporate Restructuring in Japan

Macro Effects of Corporate Restructuring in Japan

This paper presents a framework for quantitatively evaluating the macroeconomic effects of corporate restructuring and applies it to Japan. Using firm-level financial statement data, it estimates total factor productivity (TFP) of individual Japanese firms. Given the estimated distribution of productivity across firms, the paper simulates the effect of optimal restructuring, that is, reallocation of resources from less-productive firms to more-productive ones, on the dynamic path of aggregate output. The results show that the benefits of restructuring could substantially exceed the costs.