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

Danso, Albert, Fosu, Samuel, Owusu-Agyei, Samuel, Ntim, Collins G and Adegbite, Emmanuel (2021) Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure? International Journal of Finance and Economics, 26 (4). pp. 5073-5092. ISSN 1076-9307

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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.

Item Type: Article
Keywords: agency theory, capital structure, competition, financial crisis, keiretsu, Japan
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 11 May 2022 11:58
Last Modified: 11 May 2022 12:00
URI: http://sro.sussex.ac.uk/id/eprint/105832

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