Bank relations, cash holdings, and firm value: evidence from Japan

Luo, Qi; Hachiya, Toyohiko

doi:10.1108/01409170510784805

Cited by 20 publications

(19 citation statements)

References 13 publications

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“…The results of this study in accordance with the research hypothesis and in accordance with the results of research stating that the availability of cash in the company can be an opportunity to be abused by managers companies to meet their needs in the company, such as buying air conditioners, cars and things that are not useful and not needed by the firm (Luo & Hachiya, 2014). It will affect the occurrence of agency issues between managers and shareholders, so that it can also affect the firm value.…”

Section: The Effect Of Cash Holdings On the Firm Valuesupporting

confidence: 77%

“…High levels of debt can also increase the risk of the firms, which can lower the value of the firms. The results of this study were also inconsistent with the study Luo & Hachiya (2014) and Selçuk (2015) which supported the Signaling Theory. Besides, Meythi(2013) shows that leverage is the best proxy in assessing a company, because it can measure the ability of the firm's assets in repaying the debt it has.…”

Section: The Effect Of Leverage On the Firm Valuecontrasting

confidence: 57%

“…Therefore, the increased level of firm's debt can reduce the firm value. It related with research result of (Osazuwa & Che-Ahmad, 2016) The results of the reverse research actually states that, when the company has a high debt level, it can give a positive signal to investors (Luo & Hachiya, 2014;Naseer & Naseem, 2015;Selçuk, 2015). This is because, according to investors, the firm believes it can meet its obligations in the future, which of course shows that the firm is confident of its future performance.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

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Leverage, Asymmetric Information, Firm Value, and Cash Holdings in Indonesia

Cheryta¹,

Moeljadi²,

Indrawati³

2018

Jurnal Keuangan Dan Perbankan

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This research aimed to analyze the effect of leverage and asymmetry information on the firm value through cash holding as mediation variable. The populations of this research were all the firms which listed on the Indonesia Stock Exchange since 2012 -2015. A sample of this research was saturated sample and census, consisted 56 firms related the population criteria. This research used secondary data from the firm financial report through path analysis method. This research showed that leverage had a negative effect on the cash holdings, asymmetry information had a negative effect on the firm value through cash holding, and cash holding had a negative effect on the firm value. With leverage and effect on cash, holding cannot affect the firm value, due to investor risk-averse, investor risk seeker, and neutral investor has their own point of view in assessing the company. Cash holdings can lead to asymmetric information that can lead to agency conflict that can affect a company's performance, so that indirectly, with the existence of asymmetry information had an effect on the declining the firm value.

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Section: The Effect Of Cash Holdings On the Firm Valuesupporting

confidence: 77%

Section: The Effect Of Leverage On the Firm Valuecontrasting

confidence: 57%

Section: Hypotheses Developmentmentioning

confidence: 99%

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Leverage, Asymmetric Information, Firm Value, and Cash Holdings in Indonesia

Cheryta¹,

Moeljadi²,

Indrawati³

2018

Jurnal Keuangan Dan Perbankan

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“…Pinkowitz et al (2001) examine the effect of bank power on cash holdings using industrial firms from the United States, German, and Japan. Luo et al (2005) andlu et al (2012) find that firms with closer bank relations hold less cash. Therefore, we expect non-HBO firms to maintain higher cash balances to avoid, for example, significant fixed costs involved in obtaining external funds and hypothesis the bellow:…”

Section: Hypothesismentioning

confidence: 99%

Monetary Policy Shock, the Strength of Bank Relationship and Corporate Cash Policy

Luo¹

2014

IJEF

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This paper investigates whether strength of the bank-firm relationship affects the level of cash holding, especially in the tighter period of monetary policy. We measure the strength of bank-firm relationship by holding bank ownership, bank-firm proximity (holding local bank ownership) and the number of holding local bank ownership. We argue that remote location between firm and bank increases the cost of financial external fund, if the headquarters of firms and holding ownership bank are the same province, it is easier for companies to obtain external funding. So the strength of the local bank-firm relationship can ease financial constraint. As expected, stronger evidence supports that firms with stronger bank-firm relationship tend to hold less cash. The firms without stronger bank-firm relationship adjust their level of cash holding more quickly toward target level than holding local bank ownership firms and stronger bank relationship reduces the investment-cash sensitivity. Our findings are in line with our expectations and support both the precautionary motive for holding cash and the pecking order theory.

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“…In July 2016, immediately after the UK's vote on the EU membership, Softbank acquired Arm Holdings-a UK smartphone chip maker. 80 Many Japanese companies and banks are also financially strong, 81 and even if a particular entity within a corporate group is operating at a loss, it will not trigger an unsolicited hostile takeover.…”

mentioning

confidence: 99%

The Current Barriers to Corporate Takeovers in Japan: Do the UK Takeover Code and the EU Takeover Directive Offer a Solution?

Lee

2017

Eur Bus Org Law Rev

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There is a common perception that the Japanese takeover market excludes foreign companies. However, this is not because Japanese takeover law has been designed to protect target companies. Comparing Japanese takeover law with the UK Takeover Code and the European Takeover Directive, considered as competitive models, this thematic and content-based investigation reveals that Japan does not have overt anti-takeover legislation. There is no stake-building control to alert a target company; there is no provision against virtual bids; post-bid undertaking is not legally binding on the bidder; the equivalent of the mandatory bid under the UK Takeover Code and the EU Directive is set at a much higher level so making it less costly for a bidder to obtain corporate control; there is no price control to protect minority shareholders. Yet the traditional symbiotic relationship between management and shareholders through cross-shareholdings and shareholder perks remains a major obstacle to a successful unsolicited takeover. Measures under Abe's economic reform of three arrows have been introduced to increase the success of unsolicited takeover bids by reducing cross-shareholdings through tax incentive measures and increasing board independence through a softlaw based governance code. These are unlikely to have a major impact on removing the existing obstacles. Adopting the UK Takeover Code or the EU Takeover Directive would not cure the problem and would more likely entrench the existing situation.

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Bank relations, cash holdings, and firm value: evidence from Japan

Cited by 20 publications

References 13 publications

Leverage, Asymmetric Information, Firm Value, and Cash Holdings in Indonesia

Leverage, Asymmetric Information, Firm Value, and Cash Holdings in Indonesia

Monetary Policy Shock, the Strength of Bank Relationship and Corporate Cash Policy

The Current Barriers to Corporate Takeovers in Japan: Do the UK Takeover Code and the EU Takeover Directive Offer a Solution?

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