IDEAS home Printed from
   My bibliography  Save this paper

Firms’ Perceptions of the Business Cycle and Their Managerial and Financial Conditions


  • Kazumi Asako


  • Koichi Ando
  • Kazuyuki Matsumoto


Perception of the business cycle can differ among firms, which has been confirmed by extensive survey data. The question we want to answer in this paper is "What causes differences in business cycle perception?" by utilizing a newly designed questionnaire. Specifically, we match properties emphasizing the absolute level of economic activities or the direction of their changes and indicators of a firm's managerial and financial conditions, and examine the relationship between them. Based on our results, we could not find a particular indicator for the properties of firms that indicate level or trend change. However, a higher level of capital or number of employees suggests a tendency to emphasize change or rate of change, rather than the level of the business survey index. With regards to the time horizon of the business cycle, profit ratios (profit against sales or total assets) in general are good indicators. Firms with a high debt ratio tend to be myopic. Regression analysis shows that firms with high rates of investment/sales significantly tend to have a long-term vision.

Suggested Citation

  • Kazumi Asako & Koichi Ando & Kazuyuki Matsumoto, 2007. "Firms’ Perceptions of the Business Cycle and Their Managerial and Financial Conditions," Finance Working Papers 22591, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:22591

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    2. Li, David D., 1998. "Insider control and the soft budget constraint: a simple theory," Economics Letters, Elsevier, vol. 61(3), pages 307-311, December.
    3. Dahiya, Sandeep & John, Kose & Puri, Manju & Ramirez, Gabriel, 2003. "Debtor-in-possession financing and bankruptcy resolution: Empirical evidence," Journal of Financial Economics, Elsevier, vol. 69(1), pages 259-280, July.
    Full references (including those not matched with items on IDEAS)

    More about this item


    business cycle perception; financial indicators; managerial indicators; firm; Regression analysis;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:financ:22591. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.