This study investigated 145 Japanese domestic mergers and tender offers during 1981 to1998, and found close to zero 3-day abnormal returns for bidders but significantly positivereturns in a larger window period. No positive relationship exists between the bank borrowinglevel and the bidder's cumulative abnormal return. However, when using the bank directorshipto measure bank control, the result of study found that bidder's abnormal returns weresignificantly and adversely associated with bank directorship. The results also suggest thatthe costs of Japanese bank-firm relations may outnumber benefits due to changes in the macroeconomicand legal environment.