Japanese Corporate Finance: What Factors Affect the Financial Decisions of Japanese Firms?: A Survey Result

Abstract

In June 2005, a questionnaire survey was sent to 9000 companies in the Kansai Area (Osaka, Kyoto and Hyogo), the second largest economic block in Japan, with 2041 companies responding. This article introduces the results of this questionnaire survey. The greatest feature of this study is that, unlike previous works on traditional corporate finance, much information on unlisted companies is included. The dividend policy of Japanese companies, awareness of corporate governance, funding behavior, and bank selection behavior were analyzed. As a result, we found that being a consolidated subsidiary or a group member of an affiliation of companies greatly affects a company's financial activities, and that the capital adequacy ratio and size of the company are also important factors.

Keywords: Japanese small firms, Financial decision, Main banks, Dividend policy, Corporate governance

JEL Classification: G32, G24, G35, G20