The spread of the conception that managing corporations for stockholders is important and the behavior of the value of stockholder's equity when the news of M&A is published in Japan

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1 The spread of the conception that management should think stockholders' interests first and the increase of the value of stocks when the news of M&A is published in JapanAfter experiencing the long depression, severe restructurings, and a number of financial distresses for over ten years, Japanese companies recognized that the importance of shareholders' value. We examined how much degree the concept of importance of shareholders' value prevail in Japanese society by counting the number of articles that contains the words "corporate value" or "shareholders' value" in a newspaper. We found that from 1998 this concept started spreading. Next we compared the stock price movements on the day that M&A news was published in 1998, before prevalence of this conception, and 2004, after prevailing. The result is that in 1998 the average stock price decreased 3.2% compared to stock price index. In 2004, however, average stock price rose 3.6% compared to stock price index.2 Structure of corporat … More e ownership in Japan and the corporate performanceWe are interested in the change in the structure of shareholdings in Japan. Actually shares held by foreign investors and mutual funds have been increasing since late 1980s. Their behavior is different from former shareholders. They require firms to make corporate value increase. We examined whether share held by foreign investors and mutual funds affect the corporate performance. As the result we found that the higher the share held by those investors was, the greater the corporate performance measured by both Tobin's q and ROA was. We also found that this relationship became stronger in 2000 than in 1996.3 The impact of the announcement of the divestment on shareholders' valueAccording to the preceding study, which investigated whether the stock price went up on the day of the divestment publication before 1998 in Japan, there was no significant rise compared to stock price index. We try to execute the same study but in the different period, from 1998 to 2004. In the same period the Japanese public became familiar with the concept of importance of shareholders' value. On the contrary to the preceding study, we found that the stock price rose significantly compared to stock price index on the day of the divestment announcement. Less