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Listing and Financial Constraints

Author

Listed:
  • Kenichi Ueda

    (The University of Tokyo and TCER)

  • Akira Ishide

    (The University of Tokyo)

  • Yasuo Goto

    (Seijo University and RIETI)

Abstract

We confirm, with a twist, that listing to a stock exchange can mitigate financial constraints of firms, using Japanese firm-level data over 20 years, 1995-2014, controlling for main-bank relationship and majority owner influence. Compared to a similar unlisted firm, a listed firm has a lower marginal product of capital on average and more new borrowings in recessions. Theoretically, we argue that these are key pieces of evidence to indicate less tight financial constraints for the listed firms than the unlisted. However, the listed firms do not borrow more on average over time. They rather maintain the lower leverage so that they can mitigate the borrowing constraints. We also find that the listed firms do not face lower interest rates.

Suggested Citation

  • Kenichi Ueda & Akira Ishide & Yasuo Goto, 2018. "Listing and Financial Constraints," CARF F-Series CARF-F-429, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    • Handle: RePEc:cfi:fseres:cf429
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    Cited by:

    1. Fukuda, Akira, 2022. "Effects of financial frictions on employment: Evidence from Japan during the Global Financial Crisis," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    2. French, Joseph J. & Fujitani, Ryosuke & Yasuda, Yukihiro, 2021. "Does stock market listing impact investment in Japan?," Journal of the Japanese and International Economies, Elsevier, vol. 59(C).
    3. Ohk, Seungbin & Ju, Biung-Ghi, 2021. "Capitalizing on prospect theory value: The Asian developed stock markets," Japan and the World Economy, Elsevier, vol. 57(C).
    4. Ueda, Kenichi & Sharma, Somnath, 2020. "Listing advantages around the world," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    5. Kenichi UEDA & Khaliun Dovchinsuren, 2020. "Allocative Efficiency of Capital across Japanese Firms," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 16(7), pages 1-22, October.

    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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