Book contents
- Frontmatter
- Contents
- List of contributors
- Acknowledgments
- Chapter 1 Editor's summary
- Chapter 2 The corporate cost of capital in Japan and the United States: a comparison
- Chapter 3 The taxation of income from capital in Japan
- Chapter 4 Corporate tax burden and tax incentives in Japan
- Chapter 5 A closer look at saving rates in the United States and Japan
- Chapter 6 The Japanese current-account surplus and fiscal policy in Japan and the United States
- Chapter 7 Curing trade imbalance by international tax coordination
- Chapter 8 Picking losers: public policy toward declining industries in Japan
- Chapter 9 Corporate capital structure in the United States and Japan: financial intermediation and implications of financial deregulation
- Chapter 10 The Japanese bureaucracy in economic administration: a rational regulator or pluralist agent?
- Chapter 11 Japan's energy policy during the 1970s
- Chapter 12 Industry structure and government policies in the U.S. and Japanese integrated-circuit industries
Chapter 9 - Corporate capital structure in the United States and Japan: financial intermediation and implications of financial deregulation
Published online by Cambridge University Press: 07 October 2009
- Frontmatter
- Contents
- List of contributors
- Acknowledgments
- Chapter 1 Editor's summary
- Chapter 2 The corporate cost of capital in Japan and the United States: a comparison
- Chapter 3 The taxation of income from capital in Japan
- Chapter 4 Corporate tax burden and tax incentives in Japan
- Chapter 5 A closer look at saving rates in the United States and Japan
- Chapter 6 The Japanese current-account surplus and fiscal policy in Japan and the United States
- Chapter 7 Curing trade imbalance by international tax coordination
- Chapter 8 Picking losers: public policy toward declining industries in Japan
- Chapter 9 Corporate capital structure in the United States and Japan: financial intermediation and implications of financial deregulation
- Chapter 10 The Japanese bureaucracy in economic administration: a rational regulator or pluralist agent?
- Chapter 11 Japan's energy policy during the 1970s
- Chapter 12 Industry structure and government policies in the U.S. and Japanese integrated-circuit industries
Summary
Introduction
Over the last decade, capital-structure differences between U.S. and Japanese firms have been the source of considerable comment. Much of the discussion has focused on overall debt-to-equity ratios, with several authors attempting to provide an economic rationale for the apparently greater borrowing propensity of Japanese firms. Other authors have suggested that the generally higher debt-to-equity ratios of Japanese firms result in lower overall capital costs and a consequent competitive advantage relative to their U.S. counterparts. Still other authors have argued that the apparently higher debt-to-equity ratios are largely accounting artifacts.
Despite the acknowledged problems with accounting measures, there do appear to be substantial differences in borrowing practices between the two countries. Not only are average debt-to-equity ratios somewhat higher for Japanese corporations, but they are extraordinarily high (by U.S. standards) for some firms. Furthermore, the maturity composition of this debt, as well as the role played by financial intermediaries, has been quite different for Japanese borrowers.
One purpose of this chapter is to explore such differences and see what they can tell us about the plausibility of different capital-structure theories. Another purpose is to examine the use of financial intermediation and delegated monitoring (monitoring by the primary creditor) in dealing with bankruptcy risks. Particularly with regard to Japanese lending practices, this chapter will emphasize the role of financial-market regulation. Indeed, the past nature of that regulation fostered development of the “main-bank” lending system in Japan.
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- Publisher: Cambridge University PressPrint publication year: 1988
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