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Are Japanese companies less risky and less profitable than US companies? Evidence from a matched sample

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  • Fu, Jiangtao
  • Ogura, Yoshiaki

Abstract

We reexamine the differences in the profitability distributions of listed companies in the United States and Japan. To control for cross-country differences in the industrial composition, firm size, and firm age distribution, we construct a matched sample using Mahalanobis nearest neighbor matching with respect to these factors. The matched sample supports the finding of existing studies that the median and the standard deviation of profitability are significantly higher in the United States than in Japan. Our matched panel data indicate that this difference arises from both larger firm heterogeneity and more intensive risk-taking in the United States. The sector-by-sector analysis shows that the standard deviation gap is larger in the sectors with more intensive churning in asset-size ranking.

Suggested Citation

  • Fu, Jiangtao & Ogura, Yoshiaki, 2019. "Are Japanese companies less risky and less profitable than US companies? Evidence from a matched sample," Japan and the World Economy, Elsevier, vol. 51(C), pages 1-1.
    • Handle: RePEc:eee:japwor:v:51:y:2019:i:c:5
    DOI: 10.1016/j.japwor.2019.100960
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    Cited by:

    1. Ushijima, Tatsuo, 2020. "More-money and less-cash effects of diversification: Evidence from Japanese firms," Japan and the World Economy, Elsevier, vol. 56(C).
    2. Piotr Luty & Milos Petkovic, 2021. "Does Adoption of Latest Modifications of IAS 16 Influence on Company’s Profitability? Evidence from European Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 899-917.
    3. Paweł Mielcarz & Dmytro Osiichuk & Karolina Puławska, 2023. "Increasing shareholder focus: the repercussions of the 2015 corporate governance reform in Japan," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(3), pages 1017-1047, September.

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    More about this item

    Keywords

    Risk-Taking; Allocative efficiency; Firm heterogeneity;
    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
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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