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Livedoor: The Rise and Fall of a Market Maverick    
 
Product Ref: 06/288C Company: Livedoor Co.

Product Type: Case Industry: Media

Related Product(s): Teaching Note
Authors: Mitsuru Misawa   
Internet service firm Livedoor allegedly took advantage of loopholes in securities trading laws to swell the amount of assets held by the firm and its president, Horie, who led the Livedoor group. Livedoor was established in April 1996 with 6 million yen (US$55,798.38) in capital. It made its stock market debut in April 2000, with a stock market value of 57.2 billion. Its market capitalization surged to 830 billion yen (US$6.88 billion) as of December 2005, a 15-fold spike. Behind the steep jump in the corporate value were a series of highly tactical moves intended to boost the stock prices of the parent and group firms. Livedoor's strategy essentially focused on how to attract speculative investment money from individual investors, largely ignoring institutional players. Livedoor's operations turned out to be a kind of "money game" under the guise of efforts to challenge the establishment. Where did Livedoor deviate from the path of fair business, and what kind of illegality was involved in its activities? Shedding light on these questions should help both companies and investors make more constructive use of the securities and capital markets.
Functional Area : Social Enterprises & Ethics
Strategy & General Management

Issues: corporate ethics in Japan; cultural conventions; megers and acquisitions regulations in Japan
Length: Text: 9 pages
Exhibits: 4 pages
Country: Japan

Pub. Year: 2006 Level of Difficulty: 3
         
This product type is available in the following language(s):      English   Simplified Chinese
         
Related Information: In the past few years, several high-profile scandals have brought corporate ethics to the forefront of business education. This case introduces students to corporate ethics in Japan where business practice is deeply rooted in cultural conventions dictating acceptable and unacceptable behavior. However, the case of Livedoor, where a young successful businessman used unscrupulous methods to grow his business and become a Japanese success story, exposes the downside of relying on unspoken conventions to guide business practice. The fallout from Livedoor's hostile takeover attempt highlights the need for better mergers and acquisitions regulations in Japan.
 
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