Japanese Capital Structure And


Capital structure in Japan has been noted to be more highly leveraged than comparative North American firms which brings to mind the question: how is it that Japanese firms have been able to take on such high levels of debt? The answer lies in the environment that Japanese firms have been operating in. More specifically, the levels of debt are likely to have been induced by the lack of alternative sources of finance because of the effect of government regulations, and the different ownership structure in Japanese firms (with institutional lenders being major equity holders). So, the higher leverage has been a consequence of the conditions that Japanese business face—with a more ...

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debt level for a Japanese firm? Should firms still be taking advantage of the benefits of their keiretsu relationship that have allowed them to take on such levels of debt?
Our analysis focuses on Mitsubishi Corporation, a core conglomerate that is part of the larger Mitsubishi Group keiretsu having the capital structure characteristics mentioned above. The report will first explore the circumstances that may have induced Mitsubishi to its present capital structure, then look at more recent events and trends that may affect future financing decisions, and conclude with the Mitsubishi capital structure/optimum debt level analysis.
KEIRETSU AND THE JAPANESE CORPORATION
Japanese corporations have outpaced rival firms in the US and Europe in terms of capital investment throughout the 1970’s and into the 1980’s. One of the main reasons behind the high level of investment is the better access to capital that Japanese firms have compared to their western counterparts-the ...

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post-war Occupation the holding companies of the zaibatsu that controlled member firms were dissolved. Many firms subsequently regrouped to create the keiretsu we see today.

Types of keiretsu: Vertical and Horizontal
Vertical keiretsu are arranged hierarchically along production and distribution lines and organized under a principal manufacturer. The benefits of this network include increased efficiency and customer service, decreased distribution costs, simplified marketing channels, rationalized inventory controls and the facilitation of effective information sharing between members. Also, the principal manufacturers receive the benefit of being in a dominant position, which ...

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PAPER DETAILS
Added: 10/29/2006 03:38:08 PM
Category: Miscellaneous
Type: Free Paper
Words: 4872
Pages: 18

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