I teach financial management, international finance and Japanese business. My long-term research interests are banking, corporate governance and the stock market. Recently I have been looking into the relation between regulations on short sales and stock returns. My current research is focused on regional banks in Japan.
　　　　Japan's economy and its management practices are often thought to be exceptional or at first, miraculous and recently ossified. There is a wide-spread impression that Japanese business violates conventional economic thought. Japan has negative interest rates. In spite of significant labor shortages, wages do not increase. Similarly, many think that Japan's business practices are not consistent with the laws of supply and demand, or that firms do not seek profits. My view is that these ideas are wrong. Japan's economy and its management practices certainly do have unique aspects. Nevertheless, Japan's economy is best understood using conventional tools of economic analysis. For those things that "seem" to diverge from global economic practices, I argue that these are a result of Japan's history. Japan's current economic situation is a path-dependent result of its experience with industrial development, Bretton Woods, the cold war, rural to urban population shifts, globalization and demographics.
　　　　One of my recent papers examines the effect of regulations on the return behavior of short sales constrained stocks in the Japanese stock market. Since legal restrictions hinder short selling, the subsequent underperformance of highly shorted stocks is hypothesized to be more pronounced during periods when these regulations are stronger. On the basis of actual rules on short sales, the period from January 2012 to October 2013 is defined as a high regulation period and the period from November 2013 to July 2016 is defined as a low regulation period. Using all stocks listed on the Tokyo Stock Exchange and the JASDAQ Securities Exchange, my paper finds evidence that short sales constrained stocks are generally overvalued but also that the subsequent underperformance of maximally shorted stocks compared to minimally shorted stocks does not differ significantly across regulatory regimes. My paper concludes that the underperformance of short sales constrained stocks is linked to the inability to borrow stock to sell short. Legal restrictions on short sales do not appear to create additional distortions in stock prices.
　　　　My most recent paper concerns Japanese regional banks who are now facing an existential crisis. Their traditional business model has been devastated by the hollowing out of regional economies, technological change, declining populations and the rapid aging of Japan's non-urban areas. These banks must either go out of business or make significant changes. Reorganizations are a potential change that might solve the problem. Reorganizations include mergers and forming bank holding companies. This paper examines regional bank reorganizations over the period from 2008 to 2019. It analyzes the stock market's response to announcements of bank reorganizations. A positive response is defined as stock price appreciation. It is a measure of the value that an efficient financial market attributes to the reorganization. My paper finds that some kinds of reorganizations create more value than others. Specifically, mergers between banks within prefectures create more value. Yet, within prefecture mergers have the disadvantage that they might concentrate the provision of banking services in the hands of a few providers, leading to poorer services and higher fees. These reorganizations may violate competition law. My paper concludes that within-prefecture mergers are a better overall solution to the regional bank crisis.
　　　　In my opinion, there are three extremely important issues that will make a huge difference for Japan's economy over the next few decades. The first of these is its large public debt. The second is Japan's corporate governance system. The last of these issues is Japan's demographic situation. Japan's declining population will have huge impact on its economy. A reader of the public record and even scholars of management in the late 1940s would have had the impression that Japan was forever doomed to be very poor and agricultural. Yet, Japan's economy recovered and its business culture proceeded to develop world-beating production improvements. The situation now is similar in some ways. Yes, Japan faces huge hurdles in the form of its public debt, poor governance and demographic decline. The world's moves away from open-economy trade in goods, services and intellectual property also pose daunting threats. I believe that it is the job of management researchers to develop solutions to these problems. These solutions will mirror the innovations that solved the problems of the 1940s. Japan's current experience foretells what may happen to other economies as they eventually face similar problems. Japan will be a model for success.