Capital Structure Revisited. Do Crisis and Competition Matter in a Keiretsu Corporate Structure?

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, Forthcoming.

40 Pages Posted: 14 Jul 2020

See all articles by Albert Danso

Albert Danso

Leicester Castle Business School

Samuel Fosu

De Montfort University; University of Birmingham - Birmingham Business School

Samuel Owusu-Agyei

Leicester Castle Business School

Collins G. Ntim

University of Southampton Business School, UK; University of Southampton

Emmanuel Adegbite

University of Nottingham

Date Written: June 21, 2020

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.

Keywords: Capital structure; Agency theory; Competition; Financial Crisis; Keiretsu, Japan

JEL Classification: G01; G30; G31

Suggested Citation

Danso, Albert and Fosu, Samuel and Fosu, Samuel and Owusu-Agyei, Samuel and Ntim, Collins G. and Adegbite, Emmanuel, Capital Structure Revisited. Do Crisis and Competition Matter in a Keiretsu Corporate Structure? (June 21, 2020). 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, Forthcoming., Available at SSRN: https://ssrn.com/abstract=3632206

Albert Danso (Contact Author)

Leicester Castle Business School

The Gateway
Leicester, LE1 9BH
United Kingdom

Samuel Fosu

De Montfort University ( email )

Leicester, LE1 9BH
United Kingdom

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Samuel Owusu-Agyei

Leicester Castle Business School ( email )

Leicester, LE1 9BH
United Kingdom

Collins G. Ntim

University of Southampton Business School, UK ( email )

Southampton Business School
Highfield
Southampton, England SO17 IBJ
United Kingdom
+44 (0) 238059 4285 (Phone)
+44 (0) 238059 3844 (Fax)

HOME PAGE: http://www.southampton.ac.uk/business-school/about/staff/cgn1n11.page

University of Southampton ( email )

Southampton, SO17 1BJ
United Kingdom

Emmanuel Adegbite

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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