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Capital Structure Choice of the Foreign Affiliates of Japanese Multinational Firms : Characteristics and Problems


  • Yasuhiro Yonezawa

    (Waseda University, Komazawa University, Yokohama National University, METI)

  • Hiroshi Yamaguchi
  • Takeshi Yamamoto
  • Tomonari Nambu


In this paper, we compare and analyze capital structure strategies of foreign affiliates among Japanese and U.S. multinational firms in terms of efficiency of the internal capital markets. A hypothesis is that foreign affiliates of multinational firms rely more on external borrowing in well developed capital markets, and on internal borrowing otherwise. Despite the limitation with respect to the data, our research revealed that Japanese multinationals allocate the fund efficiently by utilizing internal capital markets to the same extent as U.S. counterpart do. However, they heavily rely on financing from their parent companies and Japanese banks, and diversification of the source of fund seems to be insufficient.

Suggested Citation

  • Yasuhiro Yonezawa & Hiroshi Yamaguchi & Takeshi Yamamoto & Tomonari Nambu, 2006. "Capital Structure Choice of the Foreign Affiliates of Japanese Multinational Firms : Characteristics and Problems," Microeconomics Working Papers 21894, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:21894

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