nep-sea New Economics Papers
on South East Asia
Issue of 2005‒02‒27
eight papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Why Did Japan's TFP Growth Slow Down in the Lost Decade? An Empirical Analysis Based on Firm-Level Data of Manufacturing Firms By Kyoji Fukao; Hyeog Ug Kwon
  2. Do Out-In M&As Bring Higher TFP to Japan? An Empirical Analysis Based on Micro-data on Japanese Manufacturing Firms By Kyoji Fukao; Keiko Ito; Hyeog Ug Kwon
  3. Do Firms Benefit from Multiple Banking Relationships?: Evidence from Small and Medium-Sized Firms in Japan By Masayo Shikimi (Tomiyama)
  4. Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value? By Tian, Lihui; Estrin, Saul
  5. Getting the most out of public sector decentralisation in Japan By Isabelle Joumard; Tadashi Yokoyama
  6. Cultural Goods Production, Cultural Capital Formation and the Provision of Cultural Services By Sao-Wen Cheng
  7. "The Genesis and the Development of the Pre-war Japanese Stock Market" By Yasushi Hamao; Takeo Hoshi; Tetsuji Okazaki
  8. High Corruption Income in Ming and Qing China By Shawn Ni; Pham Hoang Van

  1. By: Kyoji Fukao; Hyeog Ug Kwon
    Date: 2005–02
  2. By: Kyoji Fukao; Keiko Ito; Hyeog Ug Kwon
    Abstract: This paper compares the performance of foreign-owned and domestically-owned firms, using micro data on Japanese firms in the manufacturing sector for the period 1994-2000. The overall comparison between foreign-owned and Japanese companies shows that foreign-owned companies enjoyed 5% higher TFP as well as higher earnings and returns on capital. They also displayed a higher capital-labor ratio and higher R&D intensity. Reflecting their higher TFP and labor-saving production patterns, foreign-owned companies showed higher labor productivity and wage rates as well. By estimating Probit models, we found that foreign firms acquire Japanese firms with higher TFP levels and higher profit rates. In contrast, in-in M&As seem to have the characteristics of rescue missions. Small firms with a higher total liability/total asset ratio tend to be chosen as targets of in-in M&As. We also estimated the dynamic effects of M&As on target firms. The results indicate that out-in M&As improve target firms' TFP level and current profit/sales ratio. Compared with in-in M&As, out-in M&As bring a larger and quicker improvement in TFP and the profit rate but no increase in target firms' employment two years after the acquisition.
    Date: 2005–02
  3. By: Masayo Shikimi (Tomiyama)
    Abstract: This paper examines empirically the effects of multiple banking relationships on the cost and availability of credit. The analysis is based on an unbalanced panel data set for Japanese small and medium-sized firms over the period 2000-2002. The Hausman-Taylor estimator is used to allow for possible correlation between unobservable heterogeneity among firms and multiple banking relationships. The results suggest that the cost of credit is positively correlated with the number of banking relationships when the endogeneity of the banking relationships is considered. Multiple banking relationships have a positive effect on the availability of credit for financially constrained firms.
  4. By: Tian, Lihui (London Business School and Peking University); Estrin, Saul (London Business School and IZA Bonn)
    Abstract: The role of government shareholding in corporate performance is central to an understanding of China’s newly privatized large firms. In this paper, we analyze shareholders as agents that can both harm and benefit companies. We examine the ownership structure of 826 listed corporations and find that government shareholding is surprisingly large. Its effect on corporate value is found to be negative, but non-monotonic. Up to a certain threshold, corporate value decreases as government shareholding stakes increase, but beyond this corporate value begins to increase. We interpret this in terms of ownership concentration and the advantages of government partiality.
    Keywords: government shareholding, corporate governance, China
    JEL: G32 G34 G15 L33
    Date: 2005–02
  5. By: Isabelle Joumard; Tadashi Yokoyama
    Abstract: Revamping fiscal relations across levels of government is of paramount importance in supporting fiscal consolidation and public sector effectiveness. This paper analyses a number of problems, including regulations that limit local governments’ ability to innovate and respond to local citizens’ preferences, the inefficient system of intergovernmental grants, the complex structure of local taxes and fiscal rules which are too lenient to secure fiscal discipline. The paper concludes that the grant system should be reformed to promote local governments’ incentives to introduce innovations so as to better respond to needs at lower cost. Barriers to the effective use of sub-national governments’ taxing powers should be removed while efforts should be made to keep the tax system as simple and neutral as possible. Existing fiscal rules and market instruments should be hardened. This would require that the central government state clearly that it will not intervene as a lender of last resort to local government and ensure adequate information on local governments’ outstanding and implicit liabilities is available. This Working Paper relates to the 2005 OECD Economic Survey of Japan ( <p> Optimiser l’impact de la décentralisation au Japon <p> La réforme des relations financières entre l’État et les collectivités territoriales est essentielle pour soutenir le processus d’assainissement budgétaire et l’efficacité du secteur public. Ce document met en lumière un certain nombre de problèmes, notamment les réglementations qui limitent la capacité des collectivités territoriales à innover et à répondre aux préférences des citoyens, un système inefficace de transferts intergouvernementaux, une fiscalité locale excessivement complexe et des règles budgétaires trop laxistes. Ce document conclut qu’une réforme du système des transferts est nécessaire pour inciter les collectivités territoriales à innover afin de répondre mieux et à moindre coût aux besoins des citoyens. Les dispositions institutionnelles qui limitent l’utilisation effective des pouvoirs des collectivités territoriales en matière d’impôts doivent être éliminées tout en s’assurant que le système fiscal soit le plus simple et le plus neutre possible. Les règles budgétaires en vigueur doivent être rendues plus strictes et le fonctionnement des marchés financiers amélioré. Cela requiert que l’État annonce clairement qu’il ne jouera pas le rôle de préteur en dernier ressort en cas de difficultés financières des collectivités territoriales et qu’il s’assure de la qualité des informations concernant leurs engagements explicites et implicites. Ce Document de travail se rapporte à l'Etude économique de l'OCDE du Japon 2005 (
    Keywords: Fiscal federalism;local government;intergovernmental grants;fiscal discipline;Japan
    JEL: H2 H7 R58
    Date: 2005–01–27
  6. By: Sao-Wen Cheng
    Abstract: Cultural capital is assumed to benefit all members of society. It is accumulated through the consumption of cultural goods, cultural services are provided by cultural services industry; the stock of cultural goods is enlarged by the flow of new cultural goods created by individuals who are both consumers and creators of culture and whose utility is positively affected by the cultural goods they created. In the no-policy market economy, individuals tend to ignore the positive external effects of their cultural services consumption and creation of cultural goods on other individuals via augmenting cultural capital and cultural-goods stock. Consequently, less cultural capital and cultural-goods stock will be accumulated. The efficient allocation can be restored by introducing an appropriate subsidy that stimulates the consumers’ demand for cultural services, and the creation of new cultural goods, promotes the accumulation of cultural capital and cultural goods.
    Keywords: cultural capital, cultural services, cultural goods
    JEL: H2 H3 Z1
    Date: 2005–01
  7. By: Yasushi Hamao (Marshall School of Business, University of Southern California); Takeo Hoshi (Graduate School of International Relations and Pacific Studies, University of California, San Diego); Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper examines the development of the Tokyo Stock Exchange since its inception in 1878 to the mid-1930s. Special attention is paid to the increases in the number of listed stocks throughout this period. By the mid-1930s, the Tokyo Stock Exchange had grown to a market bigger (measured relative to GDP) than many contemporary stock exchanges in major economies. Even compared with the stock exchanges in major countries today, the pre-war Tokyo Stock Exchange was quite large. New listings in the spot market section of the Tokyo Stock Exchange were not restricted for most of this period. Our regression analysis reveals that many firms decided to list their stocks on the Tokyo Stock Exchange as they became older and bigger. The commercial code change in 1911, which increased the protection of outside shareholders, also had a positive impact on the listings on the Tokyo Stock Exchange. The Tokyo Stock Exchange reform of 1918 that aimed at standardization of the spot transactions increased the listings on the Exchange. The analysis also suggests that in the earlier period, there was a "home bias" that the companies located in the Eastern part of Japan (closer to the Tokyo Stock Exchange) were more likely to be listed in the Tokyo Stock Exchange, but the effect diminished after the Exchange reform of 1918.
    Date: 2005–02
  8. By: Shawn Ni (Department of Economics, University of Missouri-Columbia); Pham Hoang Van (Department of Economics, University of Missouri-Columbia)
    Abstract: We develop an economic model that explains historical data on government corruption in Ming and Qing China. In our model, officials’ extensive powers result in corrupt income matching land’s share in output. We estimate corrupt income to be between 14 to 22 times official income resulting in about 22% of agricultural output accruing to 0.4% of the population. The results suggest that eliminating corruption through salary reform was possible in early Ming but impossible by mid-Qing rule. Land reform may also be ineffective because officials could extract the same rents regardless of ownership. High officials’ incomes and the resulting inequality may have also created distortions and barriers to change that could have contributed to China’s stagnation over the five centuries 1400-1900s.
    Keywords: Corruption, China
    JEL: O10 O53
    Date: 2005–02–18

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