The Impact of Ownership Structure on Debt Financing of Japanese Firms With the Agency Cost of Free Cash Flow

39 Pages Posted: 28 May 2004  

Lingling Wu

City University of Hong Kong

Date Written: January 12, 2004

Abstract

This paper, using 833 observations of listed Japanese firms between the years 1992 to 2000, explore the implications of the free cash flow hypothesis concerning the disciplinary role of ownership structure in corporate capital structure policy. The results show (1) the sensitivity of ownership structure to leverage depends on growth opportunities and free cash flow. (2) Keiretsu classification affects relations between ownership structure and leverage. Overall, the results generally support the free cash flow hypothesis.

Suggested Citation

Wu, Lingling, The Impact of Ownership Structure on Debt Financing of Japanese Firms With the Agency Cost of Free Cash Flow (January 12, 2004). EFMA 2004 Basel Meetings Paper. Available at SSRN: https://ssrn.com/abstract=488042 or http://dx.doi.org/10.2139/ssrn.488042

Lingling Wu (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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