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

Danso, Albert; Fosu, Samuel; Owusu-Agyei, Samuel; Ntim, Collins G.; Adegbite, Emmanuel

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.

Citation

Danso, A., Fosu, S., Owusu-Agyei, S., Ntim, C. G., & Adegbite, E. (2020). Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure?. International Journal of Finance and Economics, 26(4), 5073-5092. https://doi.org/10.1002/ijfe.2055

• Journal Article Type: Article
• Acceptance Date: Jun 18, 2020
• Online Publication Date: Jul 9, 2020
• Publication Date: 2020-10
• Deposit Date: Jun 22, 2020
• Publicly Available Date: Jul 10, 2022
• Journal: International Journal of Finance & Economics
• Print ISSN: 1076-9307
• Electronic ISSN: 1099-1158
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 26
• Issue: 4
• Pages: 5073-5092
• DOI: https://doi.org/10.1002/ijfe.2055
• Keywords: Economics and Econometrics; Accounting; Finance
• Public URL: https://nottingham-repository.worktribe.com/output/4699628
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1002/ijfe.2055