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Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure?

Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure?
Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure?
We investigate firm-level determinants of capital structure using a large sample of 4,284 Japanese firms over a nineteen-year period (i.e., over 61,000 firm-year observations), a hitherto less examined sample for this purpose. We conduct our analysis and interpret our findings predominantly within the pecking order, the trade-off and the agency theoretical frameworks. We uncover three new findings. First, our evidence indicates that insights derived from the extant literature on capital structure are cross-national and are applicable in the context of Japan, despite the unique characteristics of Japanese firms. Second, financial crisis significantly impacts the relationship between leverage and firm-level determinants, particularly accentuating the effect of asset tangibility and growth. Third, product market competition significantly impacts the observed relationship between firm-level determinants and leverage. Our results are robust, controlling for the joint effects of competition and crisis.
Agency theory, Capital structure, Competition, Financial Crisis, Japan, Keiretsu
1076-9307
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Fosu, Samuel
21c4f19e-d261-4d58-9fc8-74696aa0113b
Owusu-Agyei, Samuel
89f0abc2-0756-480e-962d-a4b01d7c04dc
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Adegbite, Emmanuel
d45e25d6-f546-43a3-b8cb-e9b414288bc6
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Fosu, Samuel
21c4f19e-d261-4d58-9fc8-74696aa0113b
Owusu-Agyei, Samuel
89f0abc2-0756-480e-962d-a4b01d7c04dc
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Adegbite, Emmanuel
d45e25d6-f546-43a3-b8cb-e9b414288bc6

Danso, Albert, Fosu, Samuel, Owusu-Agyei, Samuel, Ntim, Collins and Adegbite, Emmanuel (2020) Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure? International Journal of Finance & Economics. (doi:10.1002/ijfe.2055). (In Press)

Record type: Article

Abstract

We investigate firm-level determinants of capital structure using a large sample of 4,284 Japanese firms over a nineteen-year period (i.e., over 61,000 firm-year observations), a hitherto less examined sample for this purpose. We conduct our analysis and interpret our findings predominantly within the pecking order, the trade-off and the agency theoretical frameworks. We uncover three new findings. First, our evidence indicates that insights derived from the extant literature on capital structure are cross-national and are applicable in the context of Japan, despite the unique characteristics of Japanese firms. Second, financial crisis significantly impacts the relationship between leverage and firm-level determinants, particularly accentuating the effect of asset tangibility and growth. Third, product market competition significantly impacts the observed relationship between firm-level determinants and leverage. Our results are robust, controlling for the joint effects of competition and crisis.

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Accepted_Manuscript_Capital Structure_IJFE_18_June_2020 - Accepted Manuscript
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Accepted/In Press date: 18 June 2020
Keywords: Agency theory, Capital structure, Competition, Financial Crisis, Japan, Keiretsu

Identifiers

Local EPrints ID: 441640
URI: http://eprints.soton.ac.uk/id/eprint/441640
ISSN: 1076-9307
PURE UUID: 7b63473d-d908-42e0-9f30-95bc719f9dbd
ORCID for Collins Ntim: ORCID iD orcid.org/0000-0002-1042-4056

Catalogue record

Date deposited: 23 Jun 2020 16:30
Last modified: 26 Nov 2021 02:27

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Contributors

Author: Albert Danso
Author: Samuel Fosu
Author: Samuel Owusu-Agyei
Author: Collins Ntim ORCID iD
Author: Emmanuel Adegbite

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