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Japan's Bubble, Deflation, and Long-term Stagnation$
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Koichi Hamada, Anil K Kashyap, and David E. Weinstein

Print publication date: 2010

Print ISBN-13: 9780262014892

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262014892.001.0001

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Corporate Restructuring in Japan during the Lost Decade

Corporate Restructuring in Japan during the Lost Decade

(p.343) 10 Corporate Restructuring in Japan during the Lost Decade
Japan's Bubble, Deflation, and Long-term Stagnation

Takeo Hoshi

Satoshi Koibuchi

Ulrike Schaede

The MIT Press

This chapter examines corporate restructuring in Japan between 1981 and 2007 in relation to financial deregulation and the banking crisis. Drawing on data on the balance sheets and income statements of publicly traded companies that were restructured, it analyzes different types of restructuring, the characteristics of the restructured companies, and how they changed over time, especially during the lost decade. Historically, larger firms, distressed firms, and firms that are highly dependent on bank loans were more likely to be restructured. In addition, firms that undergo restructuring experience a reduction in employment growth, capital, and total debt, but not bank loans. During the lost decade, however, these patterns were not observed. The likelihood of distressed firms undergoing restructuring has decreased over time, high main bank dependence had no impact on the likelihood of restructuring, and restructured firms did not reduce investments as much as they did in the 1980s.

Keywords:   restructuring, Japan, deregulation, banking crisis, publicly traded companies, lost decade, distressed firms, bank loans, debt, investments

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