2003.21

Lender's Risk Incentive and Debt ForgivenessNobuyuki Isagawa

Lender’s Risk Incentive and Debt ForgivenessNobuyuki Isagawa*
Kobe University

Abstract

This paper demonstrates the possibility that a lender’s risk incentive renders it difficult
to conduct efficient debt renegotiation. When a lending bank has a risk incentive, thebank is not likely to make a debt concession, even though such a concession could
resolve inefficiencies caused by a borrower’s risk incentive. If the debt renegotiation isrefrained, then the borrowing firm chooses a value-decreasing risky project so that thecollection of the loan becomes to be risky one, resulting in increase in the wealth of thelending bank’s shareholders. The lender’s risk incentive thus accelerates borrower’s risk
incentive.

*

Associate Professor of Finance, Graduate School of Business Administration, Kobe
University, 2-1, Rokkodai, Nada, Kobe, Hyogo, 657-8501, Japan.
Phone & Fax: +81-78-803-6907, e-mail: isagawa@rose.rokkodai.kobe-u.ac.jp
11. Introduction

Debt renegotiation is often desirable for a borrowing firm in financial distressbecause it resolves inefficiencies caused by suboptimal decisions made by the firm or its
stakeholders. However, several studies have pointed out that ex-post debt renegotiation
is difficult. For example, Giammarino (1989) and Henikel and Zechner (1993) showthat informational asymmetry between the borrowing firm and outside creditors is ahindrance to efficient debt restructuring. Gertner and Scharfstein (1991), James (1995),
and Detragiache and Garella (1996) point out that debt renegotiation often can not be
agreed upon due to conflicts among multiple creditors when the borrowing firm has anumber of different creditors.
This paper provides an alternative explanation for the difficulty of debt
renegotiation, i.e., a lender’s risk incentive. Let us consider a typical risk incentive
problem of a levered firm in financial distress, which borrows from only one bank.1 It
is well-known as risk incentive problem that shareholders of the levered firm are likely
to prefer a risky investment to a safe one, even though a risky project is less valuable
than a safe one. The risk incentive of the borrowing firm decreases the value of a bankloan as well. By forgiving debt, the risk incentive problem of the borrowing firm can be
resolved, and then the borrowing firm undertakes a value-increasing safer project. As aresult, both the total value of the firm itself and the expected amount of money that thelending bank can collect increase.
From the viewpoint of the lending bank, while debt forgiveness enhances the valueof the loan to the firm, it may decrease its shareholders’ wealth. Along the same lines in
the case of the borrowing firm, shareholders of the lending bank may prefer a risky

1

For a discussion of a risk incentive problem, see Jensen and Meckling (1976), Gavish

and Kalay (1983), Green (1984), and Green and Talmor (1986).
2

collection of the loan to a stable collection, even though the risky collection is lessvaluable than the stable one. In particular, when the financial condition of the lendingbank is unhealthy, shareholders of the bank have a risk incentive, as do the shareholdersof the borrowing firm.2 If the bank management pursues the shareholders’ wealth at thecost of the creditors (e.g., the depositors), then debt forgiveness does not occur. Thus,
the model presented in this paper shows that the risk incentive at a lending bank renders
efficient debt renegotiation impossible, even if neither informational asymmetry nor
conflicts among creditors exist.
The model has implications with regard to the stock price behavior of lending banks
in response to debt forgiveness. Suppose that management of a lending bank acts not in
the interest of the shareholders’ wealth but rather in its own interests. For example, if
the management wants to avoid default, then it prefers stable to risky loan collection.3
In such situations, the bank has an incentive to forgive debt, after which the borrowing
firm undertakes a safer project, such that the bank can achieve stable collection of theloan. Since debt forgiveness is not desirable in terms of the bank shareholders’ wealth,
the stock price of a lending bank goes down in response to debt forgiveness.
Recently, some Japanese non-financial firms and their main banks made large debt

2

Saunders, Strock, and Travlos (1990) and Demsetz and Strahan (1997) empiricallyfound a positive relationship between managerial shareholdings and bank risk-taking(market risk measure) in the U.S. Anderson and Fraser (2000) also reported thatmanagerial shareholdings were positively related to both total risk and firm-specific riskin the late 1980s, when the U.S. banking industry was under unhealthy financial
conditions. John, John, and Senbet (1991) and Goldberg and Harikumar (1991)
theoretically argued the relationship between bank risk-taking incentives and the designof deposit insurance.
3

For a discussion of default costs on management, see footnote 7.
3

forgiveness agreements. In response to the announcements of debt forgiveness, the stock
prices of all of these main banks decreased.4 Since management is separated fromownership in major Japanese banks, one might conclude that the management of major
Japanese banks does not always act in pursuit of its shareholders’ wealth. In particular,
the Japanese banking industry has been under unhealthy financial conditions since thelate of 1990s. Thus, it seems plausible that managers of Japanese major banks haveworried about defaults, in which deadweight costs, such as reputation losses or salarycuts, were incurred.
The rest of the paper is organized as follows. In Section 2, a simple model isprovided in which bank debt concession resolves a typical risk incentive problem of aborrowing firm. In Section 3, it is shown how the risk incentive of a lending bankhinders debt forgiveness. In Section 4, a numerical example of the model is given. In
Section 5, the negative effect of debt forgiveness on the stock price of a lending bank is
discussed. In Section 6, the discussion is summarized and concluded.

2. A Model of a Borrower’s Risk Incentive

date-0Debt Renegotiation

date-1date-2Choose Strategy

Debt Matures
Cash flow Realization

Figure 1: Sequence of Events

4

To my knowledge, there is no empirical study that shows the negative announcement

effect on main lending banks in response to debt concession. Dahiya, Saunders andSrinivasan (2003) reported that a significant negative stock price reaction of a leadingbank occurred when a large corporate borrower announced default.
4There are three dates in the model. At the initial date, date-0, a firm has bank debt
with a face value of D. It is assumed that the firm borrows from only one bank. In themodel, neither holdout problem, as pointed out by Gertner and Scharfstein (1991),
James (1995), Detragiache and Garella (1996), nor the asymmetric information problem,
as pointed out by Giammarino (1989) and Henikel and Zechner (1993), exist. At date-1,
the firm chooses between two mutually exclusive strategies: strategy S and strategy R.
Strategy S generates a certain cash flow of Y at the terminal date, date-2. On the other
hand, strategy R generates a stochastic cash flow, i.e., a high cash flow of X withprobability p and a low cash flow of zero with probability 1-p at date-2. For the sake ofsimplicity, it is assumed that all agents are risk-neutral and the risk-free interest rate iszero.
The following parameters are assumed in this model.
0 < pX < Y < D < X .

(1)Assumption (1) implies three things. First, pX<Y means that strategy S generates ahigher expected cash flow than does strategy R, that is, strategy S is more valuable thanstrategy R. Second, Y<D means that the expected value of the firm is lower than theface value of the outstanding debt. In this sense, the firm is in financial distress. If thefirm chooses strategy S, then all of the cash flow generated at date-2 is paid to the bank.
Third, D<X means that shareholders of the borrowing firm can obtain a positive cash
flow, X-D, if the firm succeeds with strategy R.
Under the current setting, the firm has a risk-taking incentive. Let VF(D, j) denotethe value of the equity of the firm, which is affected by both the face value of the bankdebt, D, and the strategy j∈{R, S} chosen at date-1. Since VF(D, R)=p(X-D)>0 and VF(D,S)=max{Y-D, 0}=0 hold under assumption (1), the firm chooses strategy R in order tomaximize its shareholders’ wealth. The decision of the firm is inefficient in the sense5that strategy R is less valuable than strategy S.
Furthermore, the risk-taking incentive of the borrowing firm decreases the value ofthe loan of the lending bank. Let VD(D, j) denote the value of the loan with a face valueof D, under the condition that strategy j∈{R, S} is undertaken. It is easy to show that,
according to assumption (1), VD(D, R)=pD and VD(D, S)=Y. Since pD<pX<Y, VD(D,R)<VD(D, S) holds true. Thus, the risk-taking incentive of the borrowing firm may notdesirable for the lending bank.
In order to resolve the borrower’s risk incentive problem and to increase the value ofthe loan, the bank has an incentive to forgive the debt. Suppose that both the firm andthe bank agree upon debt forgiveness and subsequently, the debt face value decreases toD* from D. In order to forgive debt, the new face value of the debt, D*, has to satisfy
two requirements.
First, it is required that the act of debt forgiveness induces the firm to undertake
strategy S. In other words, the firm chooses strategy S under the new face value of D*.
Let VF(D*, j) denote the value of the firm equity just after debt forgiveness is agreed
upon, which depends upon strategy j∈{R, S} chosen at date-1. Since VF(D*,S)=max{Y-D*, 0} and VF(D*, R)=p(X-D*), this requirement is given by
VF ( D* , S ) ≥ VF ( D* , R) ⇔ (Y − pX ) /(1 − p) ≥ D* .

(2)

Note that condition (2) implicitly requires that D*<Y. If condition (2) is not satisfied,then the firm will undertake strategy R in order to pursue the shareholders’ interests.
Second, it is required that debt forgiveness never decreases the value of the bankloan. In this section, it is assumed that the bank does not make a debt concession, if
such a concession were to decrease the value of the loan. Given that the firm chooses
strategy S, the value of the loan with a new face value, which is represented as VD(D*,S), is min{Y, D*}=D*. Then, the second requirement is given by6

VD ( D* , S ) ≥ VD ( D, R ) ⇔ D* ≥ pD .

(3)

Thus, based on (2) and (3), it follows that the risk incentive of the borrowing firm
can be resolved through debt forgiveness, provided the new face value of the bank debt,
D*, satisfies the following equation:pD ≤ D* ≤Y − pX.
1− p(4)Note that equation (4) requires thatpD ≤Y − pX.
1− p(5)

I thereby arrive at the following proposition.

Proposition 1. Suppose that both (1) and (5) are satisfied. Under the original debt
contract with a face value of D, the borrowing firm has a risk incentive, such that therisky strategy R is undertaken at date-1. This risk incentive problem can be eliminatedthrough debt concession, after which the face value of the bank debt decreases to D*
from D. Under the new face value, D*, which satisfies equation (4), the firm undertakes
the more valuable and safer strategy S. Both the value of the borrower’s equity and thevalue of the lender’s loan increase in response to such debt forgiveness.

Proposition 1 shows that ex-post debt renegotiation, which is referred to here as
efficient debt forgiveness, can resolve the borrower’s suboptimal investment. It should
be stressed that Proposition 1 is derived from the assumption that the lending bank acts
to maximize the value of the loan, or equivalently, acts to maximize the total value ofthe bank itself. The next section examines whether or not efficient debt forgiveness will
be agreed upon when the bank manager acts in the interest of the current shareholders’wealth, rather than in terms of the value of the loan.
7

3. Lender’s Risk Incentive and Debt ForgivenessFor the sake of analytical simplicity, suppose that the lending bank has two kinds ofassets at date-0; one of these assets is risk-free (e.g., Treasury bills or portfolios ofrisk-free loans) and the other type of asset is a risky loan to the borrowing firm, as
discussed in the previous section. The value of the risk-free asset is represented by A.
As mentioned above, the original face value of the risky loan is represented by D. The
bank has deposits with promised payments of B, which matures at date-2. In this setting,the equity value of the bank, represented by VB(D), is affected only by the face value ofthe risky loan.
First, consider the case in which A≥B holds. In this case, all deposits can be met,
regardless of the amount of the collection on the risky loan. Therefore, the equity valueof the bank increases monotonically with an increase in the value of the risky loan.
Since debt reduction increases the value of the loan, as shown in Proposition 1, thelending bank makes a debt concession. The borrower’s risk incentive can be resolved,
and the more valuable strategy S is undertaken.
Next, consider the case in which the bank has a risky liability at date 0, i.e., A<B
holds. In other words, under the current status of the assets, the bank cannot meet its
liability with certainty. In this case, the equity value of the lending bank does not always
increase with an increase in the value of the loan. To better conceptualize this point,
suppose that the bank does forgive debt, as shown in Proposition 1, such that the valueof the loan increases. Since the firm chooses strategy S under the new face value of D*,
the bank will collect D* with certainty. Then, the total cash flow of the bank is A+D*,
and its equity value, denoted by VB(D*), is given by
VB ( D* ) = max{ A + D* − B, 0} .

(6)8

On the other hand, if the bank does not forgive the debt, then the borrowing firmchooses strategy R. Since the total cash flow of the bank is A with probability p, and
A+D with probability 1-p, the value of bank equity is given by
VB ( D ) = p max{ A + D − B, 0} .

(7)

It should be noted that VB(D*) is not always larger than VB(D). The bank manager, who
is assumed to acts in the interest of the current shareholders’ wealth, will decide to
reduce the principal of the loan only when VB(D*)≥VB(D) is satisfied.5 Otherwise, (i.e.,
when VB(D*)<VB(D) holds), the bank manager does not forgive the debt, even thoughdebt forgiveness increases the value of the loan.
It follows from (6) and (7) that the value of the bank equity is always equal to zero
when D≤B-A holds. Therefore, in the following analysis, I will examine the case inwhich 0<B-A<D holds. The next proposition, Proposition 2, shows that under somecircumstances, the lender’s risk incentive renders efficient debt forgiveness impossible.

Proposition 2. Suppose that 0<B-A<D and
Y − pX< pD + (1 − p )( B − A) .
1− p

(8)

Then, the equity value of the lending bank decreases after efficient debt forgiveness isagreed upon.

Proof of Proposition 2 : Under condition (8),
D* < pD + (1 − p )( B − A)is satisfied for any D* satisfying (4). Then,5

It is assumed that debt forgiveness is agreed upon when VB(D*)=VB(D) holds.
9VB ( D ) − VB ( D* )≥ VB ( D) − ( D* + A − B)
= p ( D + A − B ) − ( D* + A − B )>0holds true for any D satisfying 0<B-A<D. Conversely, when condition (8) does not hold,there exists a D* that satisfy the following equation:
pD < pD + (1 − p )( B − A) ≤ D* ≤Y − pX.
1− p

It follows from 0<B-A<D and from the second inequality given above that0 < p{D − ( B − A)} ≤ D* − ( B − A) 0 < p{D − ( B − A)} ≤ D* − ( B − A) .
Since VB(D*)=D*-(B-A) for such D*, debt forgiveness increases the equity value of thebank.

Condition (8) is satisfied when either D or B-A is large. It follows from (7) that theequity value of the bank under the original loan, VB(D), increases with an increase in theresidual profit of the bank, D-(B-A). Since D-(B-A) is increasing with D, shareholders of
the bank prefer the original debt contract to debt renegotiation, when the original
principal of the loan, D, is large. On the other hand, it follows from (6) that the equity
value of the bank under the new principal of the loan, VB(D*), decreases with B-A. Then,
when B-A is large, efficient debt forgiveness is disadvantageous to the original debt
contract for shareholders of the bank. Thus, under condition (8), the equity value of thebank decreases if the bank forgives the debt. As long as the bank manager acts tomaximize the current shareholders’ wealth, she will not agree to debt renegotiation.
As shown in the previous section, if there is no debt forgiveness, then the borrowing
firm is induced to undertake risky strategy R, resulting in a riskier collection of the loan.
When a bank prefers a risky cash flow to a stable cash flow, then the bank can be said to10have a risk incentive. Proposition 2 implies that when the lending bank has a risk
incentive, then efficient debt renegotiation may not be agreed upon, such that theborrowing firm undertakes a risky strategy. The lender’s risk incentive induces theborrower to choose value-decreasing risky projects.
Proposition 2 also shows that efficient debt forgiveness is agreed upon when neither
0<B-A<D nor (8) holds. Thus, as long as the lending bank has a risk incentive,
achieving successful and efficient debt renegotiation will depend upon the asset-liability
conditions of the lending bank.

4. Numerical Example

The following numerical example illustrates Proposition 2. Suppose that p=0.5,
Y=80, D=90, X=100, and B-A=50. It is a simple matter to check that 0<B-A<D, andconditions (1), (5), and (8) are all satisfied.
First, identify the risk incentive of the borrowing firm. Under the original principalof the loan, D=90, the equity value of the firm is zero if the firm undertakes strategy S.
On the other hand, the equity value is 0.5(100-90)=5 if the firm undertakes strategy R.
Clearly, the firm undertakes strategy R to enhance the shareholders’ wealth. The valueof the original bank loan is 0.5×90=45, on the condition that strategy R is undertaken.
In order to avoid the borrower’s risk incentive, the bank will make a debt concession.
The new principal, D*, has to satisfy (4). It is assumed that the bank makes theminimum debt concession, that is, D*=(Y-pX)/(1-p)=60. Under this new face value ofthe bank debt, the equity value of the firm is 20, regardless of a strategy undertaken at
date-1. Then, the firm has no incentive to choose a risky strategy. After the bankforgives the debt, the value of the loan is 60, which is larger than 45. In this case,forgiving the debt increases the value of the bank loan.
As shown in Proposition 2, however, the bank does not forgive the debt, due to its

11own risk incentive. To better comprehend this point, note that the equity value of thebank is 0.5(90-50)=20 under the original loan, which induces the firm to undertake
strategy R. On the other hand, the equity value of the bank is 10 after the firm
undertakes strategy S in response to the debt having been forgiven. Therefore, under thecurrent setting, forgiving the debt decreases the equity value of the lending bank. If the
manager of the bank acts in the interest of the shareholders’ wealth, then the bank does
not forgive the debt.
It should be pointed out that the bank goes into default with a positive probability of
0.5 if it does not forgive the debt. No default occurs if it forgives the debt. If the
manager of the lending bank wants to avoid default rather than to increase theshareholders’ wealth, then the bank will forgive the debt; this choice will in turndecrease the equity value of the lending bank.

5. Stock Price Decline of the Lending Bank in Response to Debt Forgiveness

Thus far, it has been assumed that the management of the lending bank acts in theinterest of the shareholders’ wealth. Then, as implied by Proposition 2, efficient debt
forgiveness is agreed upon only when the stock price of the lending bank increases in
response to having forgiven the debt. The management of the bank never forgives thedebt if debt forgiveness decreases the stock price of the bank. In the real world, however,the stock price of the lending bank often falls just following an announcement of debt
forgiveness.
Table 1 represents three cases of agreements to forgive large debts; these cases
involved Japanese non-financial firms and their main banks in 2002. Daiei is one of thelargest chain stores in Japan, the operating performance of which underwent decline in
the 1990s. Both Daikyo and Towa Real Estate are real estate companies listed on theTokyo Stock Exchange 1st Section; the operating performance of both of these12companies also declined during the 1990s.
On February 26, 2002, the morning edition of the Nihon Keizai Shimbum, which is
the most popular economic press in Japan, reported that Daiei and its three main banks,
UFJ, Sumitomo Mitsui, and Mizuho, agreed upon a debt forgiveness of 170 billion Yen(approximately $ 1.5 billion). As shown in Table 1, the stock price of these main banks
dropped in response to the announcement. Comparing with the Bank Industry Index
provided by the Tokyo Stock Exchange, the abnormal return of UFJ was ‑3.6%, that of
Sumitomo Mitsui was -1.28%, and that of Mizuho was -2.62%. Comparing with TOPIX,
which is the most commonly used stock price index of the Japanese stock markets, theabnormal return of UFJ was -4.88%, that of Sumitomo Mitsui was -2.55%, and that ofMizuho was -3.89%.
Similar to the case of Daiei, a main bank, UFJ, experienced a relatively larger stock
price decline compared to both the Bank Industry Index and TOPIX, when the bankforgave the Daikyo and Towa Real Estate loans.
The question is why the lending bank agreed to the concession of the loan, which inturn decreased its stock price. The last paragraph in Section 4 provides a usefulargument for answering this question. Suppose that the management of the lending bankis subject to the deadweight costs of default or financial distress. As emphasized by
Gilson (1989) and Gilson and Vetsuypens (1993), default is costly for corporate
managers. 6 In order to avoid default, the bank management may prefer a stable

6

Gilson (1989) found that managers were not subsequently employed by another firm

for several years after being replaced in default. Gilson and Vetsuypens (1993) reported
that almost one-third of COEs were replaced in a given year for reasons relating todefault, and those who retained their positions often took substantial cuts in their salaryand bonus. Several theoretical studies regarding corporate finance, such as those of
Grossman and Hart (1982) and Zwiebel (1996), have assumed that corporate managers
13collection of the loan to a risky collection. Note that, in the current setting, the lendingbank can avoid default as long as the new principal of the loan, D*, satisfies B-A≤D*.
The bank goes into default with a positive probability of 1-p under the original principal,
D.
Since B-A<pD+(1-p)(B-A) holds under B-A<D, there exists a D* satisfying thefollowing condition:
B-A≤ max{ pD, B − A} ≤ D* ≤Y − pX< pD + (1 − p)( B − A) .
1− p

(9)

Note that both (4) and (8) are satisfied under condition (9). Then, the lending banknever goes into default after efficient debt forgiveness is agreed upon (B-A<D*),
whereas debt forgiveness decreases the equity value of the bank (Proposition 2). This
scenario accounts for the situation in which the stock price of the lending bank declines
in response to an announcement of debt forgiveness.7
The above explanation depends on two crucial assumptions. One of theseassumptions is that the lending bank does not have a risk incentive. Rather, it is assumed
that the management of the bank fears default. The other assumption is that the financial
condition of the lending bank is not healthy in the sense that it has a risky liability(A<B). These two assumptions appear to be appropriate for the current major Japanesebanks for the following reasons. First, managerial shareholdings have been traditionally

incur deadweight costs in cases involving bankruptcy.
7

In the current model, as shown in Section 2, debt forgiveness is not disadvantageous

in terms of the stock price of the borrowing firm, as long as the management of the firm
acts in the interest of its shareholders’ wealth. In the three cases of debt forgiveness
represented in Table 1, the announcement had a positive effect on the stock prices ofDaiei and Daikyo, whereas in the case of Towa Real Estate, the announcement had anegative effect on stock price.
14

very small in major Japanese banks. Since the risk incentive of a bank is likely to bepositively correlated with managerial ownership, it may be concluded that major
Japanese banks have little risk incentive.8 Second, as pointed out by Cargill (2000) andUeda (2000), the financial conditions of Japanese banks steadily worsened during the
1990s. In 1998 and 1999, the Japanese Government helped many Japanese banks byinjecting public funds into private banks. Under such unhealthy financial conditions, it
is not unreasonable to assume that the management of major Japanese banks isoversensitive to default.

6. Conclusion

This paper suggests the possibility that a lender’s risk incentive hinders the efficientdebt renegotiation of debt. When both a lending bank and a borrowing firm have a risk
incentive, the bank prefers a risky collection to stable collection of a loan. Althoughdebt forgiveness reduces the risk incentive of the borrowing firm, the bank does notforgive the loan because it aims to enhance its shareholders’ wealth. As a result, theborrowing firm chooses a value-decreasing risky project, such that the bank can collecta risky loan. The lender’s risk incentive induces the borrower to also have a risk
incentive.
This paper also demonstrates the possibility that the stock price of the lending bankwill fall in response to efficient debt forgiveness. For example, when the lending bank isunder unhealthy financial conditions, such that the management of the bank fears
default, the bank forgives the loan. In such situations, efficient debt forgivenessincreases the value of the borrowing firm, the value of the loan, and the total value ofthe lending bank, but decreases the equity value of the lending bank.

8

See footnote 2.
15

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Crisis and Change in the Japanese Financial System. Kluwer Academic Publishers, pp.
37-58.
Dahiya, S., A. Saunders, and A. Srinivasan, 2003, Financial Distress and Bank Lending
Relationship, Journal of Finance 58, 375-399.
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Companies, Journal of Money, Credit and Banking 29, 300-313.
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[2003.8.20 659]

17

Forgiveness
Date

AmountBorrower

Main Banks(Billion Yen)

2/26/2002

170

5/14/2002

410

11/8/2002

200

Daiei

DaikyoTowa Real
EstateBank Stock Industry
Return (%) Index (%)

MarketIndustry
Adjusted

TOPIX (%)

Adjusted

Return (%)

Return (%)▲ 3.61▲ 4.88UFJ▲ 5.21

Sumitomo Mitsui▲ 2.88Mizuho▲ 4.22UFJ▲ 3.48▲ 0.96▲ 2.52▲ 0.27▲ 3.21UFJ▲ 8.72▲ 2.28▲ 6.44▲ 2.05▲ 6.67▲ 1.60▲ 1.28▲ 0.33▲ 2.62

Table 1: Recent Debt Forgiveness and Bank Stock Price Reaction in Japan.

▲ 2.55▲ 3.89

Discussion Paper
No.
2002・1

AuthorNobuyuki Isagawa

2002・2

Nobuyuki Isagawa

2002・3Mahito Okura

2002・4

Elmer Sterken
Ichiro Tokutsu
Mahito Okura
Mahito Okura
Nobuyuki Isagawa
Koji Okubayashi
Toshinori Takashina

2002・5
2002・6
2002・7
2002・8

2002・9Hajime Shimizu

2002・10 Nobuyuki Isagawa
2002･11

Nobuyuki Isagawa

2002･12Kenji Kutsuna
Richard Smith

2002・13 Kunio Miyashita
2002・14 Hajime Shimizu
2002・15 Hajime Shimizu
2002・16 Koji Okubayashi
2002・17 Fumitoshi Mizutani
Shuji Uranishi
2002・18 Kazuhisa Otogawa
2002・19 Atsuo Takenaka
2002・20 Tsuneo Nakano

2002・21 Tsuneo Nakano
2002・22 Fumitoshi Mizutani
Shuji Uranishi
2002・23 Atsushi Takao
Mahito Okura
2002・24 Fumitoshi Mizutani
2002・25 Fumitoshi Mizutani
Takuya Urakami
2002・26 Yasuyuki Miyahara
2002・27 Nobuyuki Isagawa
2002・28 Mitsutoshi Hirano

Title
Cross Holding of Shares, Unwinding Cross Holding of
Shares, and Managerial
Entrenchment
A Theory of Stock Price Behavior following Repurchase
Announcements
An Equilibrium Analysis of the Insurance Market
with Vertical Differentiation
What are the determinants of the number of bankrelations of Japanese firms?
Review Article：Adverse Selection in Insurance Market
Welfare Effect of Firm Size in Insurance Market
Does Investment Horison Affect Investment Strategy ?
Research Report of Careers and Employment Process ofWorkers over 60 years old :a Case of a Japnaese
Manufacturing Company
On the Existence of Tax Equilibrium : Incomplete Market
with Capital Income Tax
Cost of Financial Distress and Debt Restructuring :Debt Forgiveness and Equity-for-Debt Swap
Open-Market Repurchase Announcements, Actual
Repurchases, and Stock Price Behavior in Inefficient
Markets―revised version of No.2001･36―
Why Does Book Building Drive Out Auction Methodsof IPO Issuance?
Evidence and Implications from Japan
International Logistics and Modal Choice
Incomplete markets with capital income tax and public
goods
On the possibility of Pareto improving of tax-equilibrium
China-Japan Comparison of Work Organization
The Post Office vs. Parcel Delivery Companies:
Competition Effects on Costs and Productivity―revised version of No.2001･33―
Earnings Forecast and Earnings Management of JapaneseInitial Public Offerings Firms
The Classification of Foreign R&D Units
The Dutch East India Company and its Corporate
Governance―revised version of No.2000･40―
The British East India Company and its Corporate
Governance
Privatization Effects on TFP Growth and Capital
Adjustments
Some Notes on the Privatization of Postal Life Insurancein JapanPrivately Owned Railways’ Cost Function, Organization
Size and Ownership
A Private-Public Comaprison of Bus Service Operators
Principal-Multiagent Relationships with Costly
Monitoring
Unwinding of Cross Shareholding under Managerial
Entrenchment
Contingency Model for Personnel Grading System―Issues on Design and Management for Qualification
System and Job Grading System―

Date(in Japanese)

1／ 2002(in Japanese)

1／ 20022／20023／2002(in Japanese)(in Japanese)(in Japnaese)

3／20023／20023／20024／2002(in Japnaese)

4／2002(in Japnaese)

4／20025／20025／2002(in Japnaese)(in Japnaese)

6／20026／20026／20027／20027／20028／2002(in Japanese)(in Japanese)

8／20028／2002(in Japanese)

8／20028／2002(in Japanese)

9／20029／20029／2002
10／2002
10／2002(in Japanese)

11／2002

Discussion Paper
No.
Author
2002・29 Atsushi Takao
2002・30 Yasuhiro Shimizu
2002・31 Hideki Murakami

2002・32 Atsushi Takao

2002・33 Nobuyuki Isagawa
2002・34 Takuji Hara
2003・1 Katsuhiko Kokubu
2003・2 Kazuhiro Tanaka
Fumitoshi Mizutani
2003・3
Shuji Uranishi
Yang Jia Yin
2003・4
Koji Okubayashi
2003・5

Mitsutoshi Hirano

2003・6

Kazuhisa Otogawa

2003・7

Nobuyuki Isagawa
Tadayasu Yamashita

2003・8Kenji Kutsuna
Marc Cowling

2003・9

Noriko Masumura

2003・10

Nobuyuki Isagawa
Katsuhiko Okada

2003・11 Mitsutoshi Hirano
Kenji Kutsuna
Richard Smith
Kenji Kutsuna
2003・13 Janet Kiholm Smith
Richard L. Smith

2003・122003・14 Hideya Kubo
2003・15 Hideki Murakami
2003・16 Norio Kambayashi
2003・17 Nobuyuki Isagawa
2003・18 Nobuyuki Isagawa
2003・19 Huang Lin
2003・20 Koji Okubayashi
2003・21 Nobuyuki Isagawa

Title
On the Emergency Effect of the late FUKUZAWA,
Yukichi in Introducing of Modern Insurance into Japan
Amortization of Intangible Assets before Newark
Morning Ledger
An Economic Analysis of Duopolistic Competition
between Gulliver and Dwarf airlines:
The case of Japanese Domestic Air Markets
Simulation Model to Consider the Penetration of Modern
Insurance in Japan −Confirmation of Emergence andPhase Transition of New Japanese Risk-Bearing System
by Evolutional Economics
Mutual Shareholding and Unwinding of Mutual
Shareholding as Stockpile for Business Recovery
TLOs in Japan in the life science area : present and future
Environmental Accounting for Corporate Management
Embeddedness and Entrenchment of Managers
The Effects of Privatization on TFP Growth and Capital
Adjustments
Labour Turnover of Japan-Affiliated Companies inShanghai
Generation and Resolution of Asymmetric Information in
Human Resource Management –In the Cases of Job
Rotation in Two Retailers in JapanMarket Liquidity around Quarterly Earnings
Announcements
Lender’s Risk Incentive and Borrower’s Risk Incentive
Determinants of Small Business Loan Approval:
Evidence from Japanese Survey after 1997 Financial
CrisisVoluntary Corporate Disclosure and the Cost of Debt:
The Case of Quarterly Reporting
Corporate Financial Strategy and Stock Price Behavior
in a Noise Trader Model with Limited Arbitrage
Two Modes of Economic Organization in the Duality
Principle and Asymmetric Personal Information
Why Does Book Building Drive Out Auction Methods of
IPO Issuance? Evidence from Japan (Revised version)
Banking Relationships and Accessto Equity Capital Markets:
Evidence from Japan’s Main Bank System
The Present Condition and Problem of JapaneseCorporate Pension Systems
An empirical analysis of the spillover and dynamic
effects of low-cost airline’s presence on rival’s price: US
duopoly case
Japanese Style of Management Education
Unwinding of Cross Shareholding for BusinessRestructuring
Unwinding of Cross Shareholding: A Signalling
Approach
Strategies and Store Development of Carregour in the
Chinese Continent
Emp lo yme nt Situation and Measu res for
In cr easing Emp lo yme nt Oppor tun ities;
Th e Cas e o f Jap an
L end er ’s Risk In cen tiv e and D eb t Forg iv ene ss(in Japanese)Date
11／2002(in Japanese)

11／2002
11／2002(in Japanese)

12／2002

12／2002(in Japanese)(in Japanese)(in Japanese)

12／2002
1／20032／20032／2003(in Japanese)

3／2003(in Japanese)

3／20033／2003(in Japanese)

3／20033／2003(in Japanese)

4／20034／2003(in Japanese)

5／20035／20035／2003(in Japanese)

6／2003(in Japanese)

7／2003(in Japanese)(in Japanese)

7／20037／2003(in Japanese)

7／2003(in Japanese)

8／20038／20038／2003