Abstract
We investigate firm-level determinants of capital structure using a large sample of 4,284 Japanese firms over a 19-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.
Original language | English |
---|---|
Pages (from-to) | 5073-5092 |
Number of pages | 20 |
Journal | International Journal of Finance and Economics |
Volume | 26 |
Issue number | 4 |
DOIs | |
Publication status | Published - Oct 2021 |
Keywords
- agency theory
- capital structure
- competition
- financial crisis
- keiretsu, Japan
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics