The Effect of the Improvement of Financial Status on the Behavior of Tangible Investments

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  • 財務内容の改善が設備投資行動に与える影響
  • ザイム ナイヨウ ノ カイゼン ガ セツビ トウシ コウドウ ニ アタエル エイキョウ

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Abstract

<p>Japanese firms tend to keep tangible investments within the range of internally generated funds especially their depreciation amounts. As far as our observations from the newspapers, journals and interviews, it holds true particularly for the firms exposed with financial constraints. Then, we raise the question whether firms will change the investments behavior, if their financial status improves. We made empirical studies using the panel data, consisting of 897 firms and 11 years in order to examine whether we can find the difference of the behavior of investments depending upon the firms' financial status and the pattern of the change of it. The results show when firms show the improvement of financial status, they will change more aggressively the behavior of investments. Additionally, we obtained the implication that firms, which have exited from the worst financial status after the improvement, tend to more aggressively invest than the firms, which have moved from the ordinary to the soundest one.</p>

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