A massive disaster has an enormous impact on the economy. However, a disaster causing negative impacts on particular firms may positively impact their competitors. Therefore, it would be useful to understand the complicated impact of massive historical disasters on economic and business activities. In this paper, focusing on the TOKYO KABUSHIKI TORIHIKIJO (Tokyo Stock Exchange) during the Great Kanto Earthquake on September 1, 1923, we examine empirically how the earthquake affected corporate management and stock prices. To address this issue, we construct a dataset of daily stock prices of individual firms and conduct a statistical test of whether the earthquake caused structural changes in their stock prices. In addition, we clarify the factors that caused the structural changes in terms of business history.

Our findings are summarized as follows: (1) The changes in stock prices accurately reflected damage caused by the earthquake. We demonstrate that most investors could immediately obtain detailed information on the earthquake’s aftermath through newspapers and economic magazines. (2) Even for a natural disaster with a vast macroeconomic impact like the Great Kanto Earthquake, the impact is heterogeneous among firms. In particular, some firms suffered severe damage from the disaster, while others suffered relatively minor damage. Given the competitive market environment, such differences harmed the former but positively impacted the latter. (3) Such prompt reaction of stock prices suggests that the stock market satisfied the semi-strong form efficiency even in the early 1920s.

This paper clarifies the historical changes in the Nippon Professional Baseball League (NPBL)(The abbreviation of the current organization is NPB) in two points: The governance system and basic rules about income such as admission fee and broadcasting rights fee. The analysis period was 1936–1952.

When NPBL was founded in 1936, it started with a decentralized governance system and business scheme modeled after the Tokyo University Baseball League. NPBL, as a promoter of the games, distributed profits to baseball teams. The NPBL’s rules regarding income were co-prosperity. After a few years, the governance system became centralized. However, after a temporary suspension due to the war, it returned to its original decentralized system. In 1948, executives of NPBL’s headquarters who aimed to manage a centralized system organized two corporations, a public-interest corporation and a joint-stock company, to reduce the initiative of the teams. However, the corporations did not work well. In this situation, a newspaper publishing company aiming to enter the professional baseball market with the sales strategy of its main business organized a new league. It was the starting point for the current basic rules with a decentralized governance system and free-competitive business scheme, in which the home team as a promoter monopolizes admission fees and broadcasting rights fees.

Previous studies have pointed out that the following causes formed such NPB characteristics:

1) Notification of the corporate tax on advertising expenditure in 1954

2) Inequalities in the number of fans and income from broadcasting rights due to the spread of television

As a correction to this view, this study reveals the following causes:

1) The rejection of NPBL business scheme by the Pacific League in 1950

2) Agreement on broadcasting rights in 1952