2006 Fiscal Year Final Research Report Summary
Determinants of Capital Structure in Japanese Firms -Corporate Governance View-
| Project/Area Number |
16603005
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
ガバナンス
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| Research Institution | University of Marketing and Distribution Sciences |
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Principal Investigator |
KURUS Masatoshi University of Marketing and Distribution Sciences, Faculty of Commerce, Associate Professor, 商学部, 助教授 (80268573)
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| Project Period (FY) |
2004 – 2006
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| Keywords | Pecking Order Theory / Capital Structure / Risk-Averse Behaviors / Bank Loans / Collateral / Firm Age / Line of Credit |
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| Research Abstract |
The aim of the first research is to examine a managerial behavior concerning a risk management with the agency theory. A critical review of prior works tells us that its theory has room to explain managerial behaviors with accounting figurers. In addition, it indicates that an agent prefers taking risk-averse behaviors. One of implications of this review is to suggest some possible hypotheses in order to account for managerial behaviors in Japanese firms.
The second research critically reviews a pecking-order theory to examine capital structure of a firm and its empirical research. The critical review tells that the pecking order theory helps explaining a unique capital structure that an established firm pursues. As a result, the theory has a wide applicability in examining a unique firm. However, the theory must be refined in order to examine a managerial motivation to finance. Incorporating of a managerial norm into the theory will enable us to re-examine the effectiveness of the theory and improve the theory.
The purpose of the third research is to examine the relationships among bank loans, collateral, and instrument. Empirical results provide insightful relationships among bank loans, collateral, and instrument. The longer history a head-quarter has, the higher its credit. A long-term bank loan contract indicates that a firm group is putting into bigger projects operation in terms of both short and long term views. A financial institution considers the balance of retained earnings and the maturity of a client in determining collateral. However, the size of a firm is more important factor for a financial institution in requiring its client to offer collateral and promise an instrument. Finally, a financial institution is capable of discerning an appropriate asset for collateral.
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