Inventory Behavior: A Comparative Study of U.K. And Japanese Firms

CEPR Discussion Paper Series #1545

Posted: 21 Apr 1997

See all articles by Jenny Corbett

Jenny Corbett

Australian National University (ANU) - Crawford School of Public Policy; University of Oxford - Nissan Institute of Japanese Studies; Centre for Economic Policy Research (CEPR)

Donald Hay

University of Oxford - Department of Economics

Helen Louri

Athens University of Economics and Business - Department of Economics

Date Written: January 1997

Abstract

This paper analyzes the determinants of the inventory to assets ratio in panel data sets of Japanese and U.K. firms in the period 1960-85. The analytical framework sets inventory decisions in the context of decisions by the firm about other assets and liabilities, in contrast to traditional models of inventories. Investment in inventories in Japan is found to be particularly related to sector-specific inflation rates and expected sales, negatively related to expected profits, and not much affected by interest rates. By contrast, U.K. inventories are generally positively related to profit rates and respond to short-term interest rates. Once other variables are taken into account, the coefficient on a time trend is positive for Japan (negative for the United Kingdom), which casts some doubt on the widely held view of Japanese innovation in inventory holding.

JEL Classification: D21, E22

Suggested Citation

Corbett, Jennifer M. and Hay, Donald and Louri, Eleni (Helen), Inventory Behavior: A Comparative Study of U.K. And Japanese Firms (January 1997). CEPR Discussion Paper Series #1545. Available at SSRN: https://ssrn.com/abstract=3898

Jennifer M. Corbett (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

Crawford Building
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

University of Oxford - Nissan Institute of Japanese Studies ( email )

27 Winchester Road
Oxford OX2 6NA
United Kingdom
01865 274575 (Phone)
01865 274574 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Donald Hay

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Eleni (Helen) Louri

Athens University of Economics and Business - Department of Economics ( email )

76 Patission Street
GR-10434 Athens
Greece
+30 1 8203122 (Phone)
+30 1 8238249 (Fax)

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