FIN490C: Japanese Financial Management:Spring 2017

PROFESSOR MITSURU MISAWA

Class Time Wednesday and Friday: 10:30 a.m. - 11:45 a.m. G102Office Room: Bus Ad E601eOffice Phone: 956-9713

E-Mail: misawa@hawaii.eduOffice Hours: Wednesday and Friday 11.45 a.m. - 1:00 p.m.Website: http://www2.hawaii.edu/~misawa

Required Text:

(1) Mitsuru Misawa, Cases on International Business and Finance in JapaneseCorporations. 2nd Edition, World Scientific Publishing, 2015 or (Mitsuru Misawa, Cases onInternational Business and Finance in Japanese Corporations, Hong Kong University Press,November 2007)

(2) David Eiteman, Arthur Stonehill, and Michael Moffett, Multinational Business Finance,1lth Edition, Addison-Wesley Publishing, 2003 or (Michael Moffett, Arthur Stonehill, and,David Eiteman, Fundamentals of Multinational Finance. 5th Edition, Addison-WesleyPublishing, February 2014)

Reference Book:

(Mitsuru Misawa, Current Business and Legal Issues in Japan's Banking and FinanceIndustry, 2nd Edition, World Scientific Publishing, 2011.

*A11 books are available tlirough the UH Bookstore. If you purchase either of the referencebooks, Professor Misawa would be happy to autograph them.

Objectives of the Course:

Objectives of the Course: Japan's economy spurred by "Abenomics" has showedpromising signs of life after more than 20 years of deflation. The financial management ofJapanese corporations is attracting attention from all over the world. There are significantdifferences remain between the financial management philosophy and techniques usedwithin Japanese companies and those used in the US. These include the significantdifferences in the use of capital budgeting techniques, economic and political assessment ofprojects, decision-making styles, and techniques of corporate governance.

Prerequisites: This course is an extension of F321, which is not a prerequisite butrecommended to take in advance.

Exam Policy: Students should bring finance calculators to the exams and laptops are notallowed. Make-up exams will only be given under extreme circumstances, such as injury orillness. For each exam, students can bring in one-page note prepared in advance (bothsides). There will be two midterm exams and a final exam (cumulative) at the end of thesemester.

Grading Policy: The final grade will be based upon the following formula:Mid (1 + 2)/2 x 0.6 + Final x 0.4. There is no change in grading standards and plus/minusgrades are given.

Homework Problems: Homework problems are assigned for each chapter. These are notcollected and graded, nor do they count explicitly toward a student's grade. However, it isimpossible to master the material in this course without doing the homework problemsconscientiously. There will be a high correlation between exam material and homeworkassigned. ANSWERS to most homework problems will be provided in class.

Course Attendance Policy: Students are expected to attend every class, thoughoccasionally other obligations may take precedence. (If you expect to miss more than fourclass meetings, you should consider taking this course another semester.) Please get thenotes and any handouts for the preceding class from your fellow students.

Scholarships: Through the Center for Japanese Global Investment and Finance, a total of$30,000 a year is distributed as scholarships to the students of CBA. Professor Misawa -Honjo International Fellowship is available to selected undergraduate and graduate studentswho want to study in Japan. Students taking FIN 321 or FIN 637 are given first preference.The students interested in the scholarship through the Center should see Professor Misawaand also visit his website.

Misawa's Cases: My 22 Cases are listed on Harvard Business Online in the US. For the caseof "Tokyo Disneyland - Joint Venture vs. Licensing'* and my other 21 cases, see HarvardBusiness Online;

https://cb.hbsp.hai^ard.edu/cbmp/search?term=misawa&n:::&naviqation:::&coursepackName=&libraryltemld=

They are also listed on the European Case Clearing House (http:/www.ecch.com/) in Europeand on the Asian Case Research Center (ACRC) at University of Hong Kong(http.7www.acrc.org.hk/) in Asia. Through them, I sold 2060 copies of my cases in 2007,1555 copies in 2008, 1895 copies in 2009, 2327 copies in 2010, 1492 copies in 2011, 1798copies in 2012, 2575 copies in 2013. 2778 copies in 2014 and 4295 copies in 2015 (totalnumber sold in 9 years is 20,599 copies) to worldwide universities and companies.Harvard Business School (MBA) purchased 1063 copies of my cases for their own use in2010. Other major universities such as MIT, USC, Wharton and Cornell are also constantusers of my cases.

Suggested Readings:

(1) The following recent articles written by Professor Misawa will provide you with boththe building blocks on which to construct your understanding of key international currentissues and the innovative tools to help keep you at the forefront of internationalmanagement thinking. These cases will be distributed in class. Students can also obtainthese readings from Social Science Research Network: http://www.ssrn.com. Thesedocuments on this website are available for no charge.

1. "Bad Loans: A Comparative Study of U.S. and Japanese Regulations ConcerningLoan Loss Reserves.'" The Banking Law Journal. November 2004, pp. 898-926.

2. "Bad Loans of Japanese Banks - Directors' Civil and Criminal Liabilities -." Falledition, Temple International and Comparative Law Journal. December 2004, pp. 101-127.3. "Japanese Issues and Perspective on the Convergence of International AccountingStandards," Journal of International Law and Business of Northwestern University Schoolof Law, Spring 2005 Symposium Issue, April 2005.4. "Laws and Regulations on Problem Loans in Japan - Is Application of InternationalAccounting Standards Possible?" Columbia Journal of Asian Law. Vol. 18. No. 1. Fall2004, pp. 1-45.5. "Bank Directors' Decisions on Bad Loans: A Comparative Study of U.S. and JapaneseStandards of Required Care,'* The Banking Law Journal. May 2005. Number 5, Volume122, pp. 429-466.6. "Shareholders' Derivative Action and Directors; Responsibility in Japan," Perm StateInternational Law Review (The Dickinson School of Law). Volume 24. Summer 2005,No. 1, pp. 1-57.7. "The Tokyo International Capital Market for Foreign Issuers and RequiredDisclosure," The Journal of Payment Systems Law, published by A.S. Pratt & Sons, thesame publisher as The Banking Law Journal. November/December 2005. Number 7.Volume l,pp.699-753.8. "Comparative Study of Us and Japanese Bank Director's Duty of Disclosure," TheBanking Law Journal. January 2006, Number 1, Volume 123. pp.39-79.9. "Bank Directors' Responsibility for Bad Loans at Japanese Banks - Case Study of theLong Term Credit Bank of Japan --," Australian Journal of Asian Law. Asian Law Centre,University of Melbourne.10. "A Recent Reform of Japanese Banking Law-Comparison of The US and JapaneseLegal Systems for Banking Agencies", The Banking Law Journal, June 2006, Number 6,Volume 123, pp.536-552.11. "An Overview of Problems Concerning Political Donations in Japan', ColumbiaJournal of Asian Law. Columbia University, Spring 2008, Volume 21, No.2, pp.162-181.12. "New Pricing Strategy under Deflation, Case Study of a Japanese Company". GlobalBusiness and Finance Review. 2013, pp. 01-11.13. "A Review of Abenomics: The Bold Plan to End Deflationary Recession in Japan".The World Financial Review. Jan- Feb, 20J4(http://www.worldfinancialreview.com/?p=4063), pp.68-78.

(2) The following cases developed by Professor Misawa and compiled in Cases onInternaiional Business and Finance in Japanese Corporations (Book). November 2007.Hong Kong University Press (ISBN: 978-962-209-891-6; British Library Cataloguing'-in-Publication Data). (174pages). Please see Course Calendar for detailed schedule forCase discussion.

Cases in Book

1. Tokyo Disneyland: Licensing versus Joint Venture2. Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences inCapital Budgeting Concepts and Methods between American and Japanese Companies3. A Rogue Trader at Daiwa Bank (A): Management Responsibility under DifferentJurisprudential Systems, Practices, and Cultures4. A Rogue Trader at Daiwa Bank (B): The Board Meeting on September 25, 1995, inJapan5. Hostile Takeover Battle in Japan: Fuji TV versus Livedoor for NBS6. Livedoor: The Rise and Fall of a Market Maverick

7. Nireco Japan: Introduction of the Poison Pill8. Ina Food Industry: A New Management Philosophy for Japanese Businesses9. OSG Corporation: Hedging Transaction Exposure10. Bank of Japan's Meeting in March 2006: An End to the Quantitative Easing Policy?

(3) Additional 12 cases published by Professor Misawa;1. "World Co. Ltd. Japan: Why Go Private? ". A Case Study, Aian Case ResearchCentre(ACRC), The University of Hong Kong, January, 2008, Ref.07/362C at ACRC, CaseNo.l 1 at CJGIF, SCB, UH, 19 pages(Main Text) and 8 pages(Teaching Notes).2. "J-COM: Share-Trade Irregularities on the Day of IPO". A Case Study, Asian CaseResearch Centre(ACRC), The University of Hong Kong, April, 2008, Ref.08/378C atACRC. Case No. 12 at CJGIF, SCB, UH. 13 pages(Main Text) and 8 pages(TeachingNotes).3. "SOFTBANK'S New Strategy: The Largest LBO in Japan". A Case Study, Asian CaseResearch Centre(ACRC). The University of Hong Kong. December. 2008, Ref.09/399C atACRC, Case No. 13 at CJGIF, SCB. UH, 22 pages(Main Text) and 9 pages(TeachingNotes).4. "Keidanren: Foreign Political Contributions in Japan". A Case Study, Asian CaseResearch Centre(ACRC). The University of Hong Kong, October. 2009, Ref.09/429C atACRC, Case No. 14 at CJGIF, SCB. UH, 18 pages(Main Text) and 5 pages(TeachingNotes).5. "Licensing Arrangement or Joint Venture (4): An Ex Post Case Study of TokyoDisneyland". A Case Study. Asian Case Research Centre(ACRC), The University of HongKong. December, 2012, Ref.l2/512C ed. at ACRC. Case No. 15 at CJGIF, SCB, UH, 20pages(Main Text) and 11 pages(Teaching Notes).6. "'Tokyo Disneyland (3): New Pricing Policy Needed for Sluggish Demand". A CaseStudy. Asian Case Research Centre(ACRC). The University of Hong Kong. December.2012, Refl2/454C ed. at ACRC, Case No. 16 at CJGIF, SCB, UH, 17 pages(Main Text)and 8 pages(Teaching Notes).7. "Licensing Arrangement OrJoint Venture (4):An Ex Post Case Study ofTokyoDisneyland", Asian Case Research Center (ACRC). The University of Hong Kong, 2012,Ref.l2/512C ed. at ACRC, Case No. 17 at CJGIF, SCB, UH, pp. 20 pages(Main Text) and11 pages(Teaching Notes).8. "Ina Food Industry (2): Marketing Strategies InA Deflationary Environment", AsianCase Research Center(ACRC), The University of Hong Kong, 2013, Ref. 13/531C ed. atACRC, Case No. 18 at CJGIF, SCB, UH, pp. 13 pages(Main Text) and 9 pages(TeachingNotes).9. "Bank ofJapan (2): Meeting on April 4, 2013 (Doubling Monetary Base ViaGovernment Bond Purchases) ", Asian Case Research Center(ACRC), The University ofHong Kong, 2013. Ref.l3/532C, ed. at ACRC, Case No.19 at CJGIF, SCB, UH, pp. 18pages(Main Text) and 14 pages (Teaching Notes).10. "Abenomics ofJapan: What was it? Could This ConquerJapan 's Decade-LongDeflation? "Asian Case Research Center(ACRC). The University of Hong Kong, 2013,Refl3/534C, ed. at ACRC. Case No.20 at CJGIF, SCB, UH, pp. 22 pages (Main Text) and11 pages (Teaching Notes).11. "Sales Tax Increase in 2014 Under Abenomics: TheJapanese Government'sDilemma" Asian Case Research Center(ACRC). The University of Hong Kong, 2016.Ref.l5/563C, ed. at ACRC, Case No.21 at CJGIF, SCB, UH, pp. 14 pages (Main Text)and 9 pages (Teaching Note).

12. "The Toshiba Accounting Scandal: How Corporate Governance Failed "Asian CaseResearch Center (ACRC), The University of Hong Kong, 2016, Refl6/579C, ed. At ACRC,

Case No.22 at CJGIF, SCB, UH, pp. 21 pages (Main Text) and 11 pages (Teaching Notes).

Course Calendar

Text (1) David Eiteman, Arthur Stonehill, and Michael Moffett, Multinational BusinessFinance, 13th Edition, Addison-Wesley Publishing, 2012.Text (2) Mitsuru Misawa, Cases on International Business and Finance in JapaneseCorporations. 2nd Edition, World Scientific Publishing, 2015

(1) Investments Date: Jan. 11,13,18,20,25Chapters in the Text (1) Chapter 16, 17 and 18My Cases

(a) Misawa, "Licensing Arrangement Or Joint Venture (4): An Ex Post Case Study of TokyoDisneyland", December, 2012

(b) Misawa, "Tokyo Disneyland and the DisneySea Park: Corporate Governance andDifferences in Capital Budgeting Concepts and Methods between American and JapaneseCompanies", 2006

(c) Misawa, "Tokyo Disneyland - Joint Venture vs. Licensing ", 2005(d) Misawa. "Hostile Takeover Battle in Japan: Fuji TV vs Livedoor for NB5"'. 2006(e) Misawa, " NIRECO JAPAN: Introduction of the Poison Pill", 2006(f) Misawa, M&A for Foreign Investments in Japan (Chapter 10)(g) Misawa, Financing Japanese Investments in the United States: Case Studies

of a Large and a Medium-Sized Firm (Chapter 13)(h) Misawa, M. (1986). Merger and Acquisition Activities in Japan: the Present and the

Future. Vanderbilt Journal ofTransnationalLaw, Vol.19 (No.4).(i) Misawa, M. (1986). Merger and Acquisition Activities in Japan: the Present and the

Future. Vanderbilt Journal ofTransnationalLaw, Vol.19 (No.4).(j) Misawa, M. (1985). Financing Japanese Investments in the United States: Case Studies of a

Large and a Medium-Size Firm. Financial Management, The Financial ManagementAssociation, Vol.14 (No.4), 5-12.

(k) Misawa, "Shareholders' Derivative Action and Directors; Responsibility inJapan," Penn State International Law Review (The Dickinson School of Law), Volume 24.Summer 2005, No.l, pp. 1-57 (Chapter 8).

(2) Abenomics Date: Feb.l, 3, 8, 10,15Chapters in the Text (3) Chapter 7My Cases

(a) Misawa. "Abenomics of Japan: What was it? Could This Conquer Japan's Decade-LongDeflation?", Nov. 2013

(b) Misawa, "Bank of Japan (2): Meeting on April 4, 2013 (Doubling Monetary Base ViaGovernment Bond Purchases)". April, 2013

(c) Misawa. "Ina Food Industry (2): Marketing Strategies In A Deflationary Environment",August 2013

(d) Misawa. "Tokyo Disneyland (3): New Pricing Policy Needed for Sluggish Demand". ACase Study, December, 2012,

(e) Misawa, "Bank of Japan's Meeting in March 2006:An End to The Quantitative EasingPolicy? ",2006

(f) Misawa. "New Pricing Strategy under Deflation, Case Study of a Japanese Company".Global Business and Finance Review, 2013, 01-11.

(g) Misawa. "A Review of Abenomics: The Bold Plan to End Deflationary Recession in Japan".The World Financial Review, Jan-Feb2014(http://www.worldfinancialreview.com/?p=4063), 68-78.

Feb. 17 Mid Exam (1)

(3) Derivatives and Swaps Date: Feb. 22, 24 March 1.3.8Chapters in the Text (1) Chapter 8My Cases

(a) Misawa, "Saizeriya and the Use of Foreign Currency Coupon Swaps: Was this for HedgingOr Speculation?" March 2014

(b) Misawa, "A Rogue Trader At Daiwa Bank: Management Responsibility Under DifferentJurisprudential Systems, Practices and Cultures", 2005

(c) Misawa, "A Rogue Trader At Daiwa Bank: The Board Meeting on September 25thl995 inJapan", 2005

(4) Global Financing Date: March 10.15.17Chapters in the Text (3) Chapter 13, 14 and 15My Cases

(a) Misawa, "SOFTBANK'S New Strategy: The Largest LBO in Japan".(b) Misawa, "World Co. Ltd, Japan: Why Go Private? "January, 2008(c) "J-COM: Share-Trade Irregularities on the Day of IPO". April, 2008Cases in the Text(d) Misawa, Tokyo as the International Market for Foreign Issuers and Required Disclosure

(Chapter 2)(e) Misawa. Sales Recognition in Japan and the U.S. - Possibility of Adopting International

Accounting Standards in (Chapter 6)(f) Misawa, The Japanese Issues and Perspective on the Convergence of International

Accounting Standards (Chapter 7)(g) Misawa, Shareholders' Action and Director's Responsibility in Japan (Chapter 8)(h) Misawa, A New Trend in Japan's Security Regulations -Efficiency Test of US Laws in the

Different Markets (Chapter 9)(i) Misawa, M. (1996). Daiwa Bank Scandal in New York: Its Causes, Significance, and

Lessens in the International Society. Vanderbilt Journal of Transnational Law,Vol.29(No.5). 1023-1069.

(j) Misawa, M. (1992). Loss Compensation in the Japanese Securities Market: Causes,Significance, and Search for a Remedy. Vanderbilt Journal of Transnational Law, Vol.25(No.l), 37-58.

(k) Misawa, "The Tokyo International Capital Market for Foreign Issuers and(a) Required Disclosure," The Journal of Payment Systems Law, published by A.S. Pratt &

Sons, the same publisher as The Banking Law Journal. November/December 2005, Number7, Volume 1, pp.699-753.

(b) Misawa, "Comparative Study of Us and Japanese Bank Director's Duty ofDisclosure," The Banking Law Journal. January 2006, Number 1, Volume 123, pp.39-79

(c) Misawa. "Bad Loans: A Comparative Study of U.S. and Japanese Regulations ConcerningLoan Loss Reserves.'" The Banking Law Journal. November 2004, pp. 898-926

(d) Misawa, "Bad Loans of Japanese Banks - Directors' Civil and CriminalLiabilities. "Fall edition. Temple International and Comparative Law Journal. December2004, pp. 101-127.

(e) Misawa. "Laws and Regulations on Problem Loans in Japan - Is Application ofInternational Accounting Standards Possible?" Columbia Journal of Asian Law, Vol. 18,No. 1, Fall 2004, pp. 1-45.

(f) Misawa "Bank Directors' Decisions on Bad Loans: A Comparative Study of U.S. andJapanese Standards of Required Care," The Banking Law Journal. May 2005, Number 5.Volume 122, pp. 429-466

(g) Misawa, "Bank Directors' Responsibility for Bad Loans at Japanese Banks - Case Study ofthe Long Term Credit Bank of Japan --," Australian Journal of Asian Law. Asian LawCentre, University of Melbourne

March 22 for Study day (no class),March 24 for MIDTERM EXAM (2)

(5) Foreign Exchange Exposure Date: April 5,7,12Chapters in the Text (3) Chapter 10, 11 and 12My Case

(a) Misawa, "OSG Corporation: Hedging Transaction Exposure" , 2006

(6) Managing Global Operation Date: April 19, 21Chapters in the Text (3) Chapter 10, 11 and 1My Cases

(a) Misawa, Sales Recognition in Japan and the US — Possibility of Adopting InternationalAccounting Standards in Japan (Chapter 6)

(b) Misawa, A Recent Reform of Banking Law — US and Japanese Comparative Study onCreation of Legal System for Banking Agencies (Chapter 11)

(c) Misawa, M. (1985). World-wide Unitary Taxation and its Impact on Japanese Investmentin the U.S. Sloan Management Review, MIT, Vol.26{Ho2), 51-55

(d) Misawa, "Japanese Issues and Perspective on the Convergence of International AccountingStandards," Journal of International Law and Business of Northwestern University Schoolof Law, Spring 2005 Symposium Issue, April 2005 (Chapter 7).

(e) Misawa, "A Recent Reform of Japanese Banking Law-Comparison of The US andJapanese Legal Systems for Banking Agencies", The Banking Law Journal. June 2006,Number 6, Volume 123, pp.536-552 (Chapter 11).

(7) Corporate Ownership, Goals and Governance Date: April 26, 28Chapters in the Text (3) Chapter 2My Cases

(a) Misawa, "Keidanren: Foreign Political Contributions in Japan". October, 2009(b) Misawa. "Ina Food Industry: A New Management Philosophy For Japanese Businesses ".

2006

(c) Misawa. " Livedoor: The Rise and Fall ofa Market Maverick, 2006.(d) Misawa, Japanese Shareholders' Lawsuits Concerning Political Donations (Chapter 12)(e) Misawa. New Japanese-Style Management in a Changing Era (Chapter 14)(f) Misawa. Successful Japanese Management Cases as a Contrarian(Chapter 15)(g) Misawa. "An Overview of Problems Concerning Political Donations in Japan', Columbia

Journal of Asian Law, Columbia University, Spring 2008, Volume 21, No.2, pp. 162-181

May 3 for Study day (no class),May 8 at 9.45-11.45am Final Exam.