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Inter-firm relationships and leverage adjustment

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  • Yamada, Kazuo

Abstract

This paper points out that inter-firm relationships influence the speed of adjustment of financial leverage, using business group–affiliation data of Japanese business groups (keiretsu) spanning about 30 years. It finds that the adjustment speed of firms within business groups is slower than that of independent firms. This finding remains robust given the use of several estimation methods. Overall, findings indicate the importance of considering the inter-firm relationship in capital structure study.

Suggested Citation

  • Yamada, Kazuo, 2019. "Inter-firm relationships and leverage adjustment," Research in International Business and Finance, Elsevier, vol. 50(C), pages 381-391.
    • Handle: RePEc:eee:riibaf:v:50:y:2019:i:c:p:381-391
    DOI: 10.1016/j.ribaf.2019.06.006
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    Cited by:

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    2. Zhu, Yanli & Yin, Li & Lu, Xueyan, 2024. "Peer effects with multifaceted network dependence structures in R&D investment decisions: Evidence from Chinese listed firms," Research in International Business and Finance, Elsevier, vol. 70(PA).
    3. Martin Pech & DrahoÅ¡ VanÄ›Ä ek & Jaroslava Pražáková, 2021. "Complexity, continuity, and strategic management of buyer–supplier relationships from a network perspective," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 17(3), pages 189-226.
    4. Morais, Flávio & Serrasqueiro, Zélia & Ramalho, Joaquim J.S., 2022. "Capital structure speed of adjustment heterogeneity across zero leverage and leveraged European firms," Research in International Business and Finance, Elsevier, vol. 62(C).
    5. Tomeczek, Artur F., 2022. "The evolution of Japanese keiretsu networks: A review and text network analysis of their perceptions in economics," Japan and the World Economy, Elsevier, vol. 62(C).
    6. Shah, Muhammad Hashim & Xiao, Zuoping & Abdullah, & Quresh, Shakir & Ahmad, Mushtaq, 2020. "Internal pyramid structure, contract enforcement, minority investor protection, and firms’ performance: Evidence from emerging economies," Research in International Business and Finance, Elsevier, vol. 52(C).

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    More about this item

    Keywords

    Capital structure; Adjustment speed; Inter-firm network;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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