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Listing and Financial Constraints

Author

Listed:
  • Kenichi UEDA
  • Akira ISHIDE
  • Yasuo GOTO

Abstract

We confirm, with a twist, that listing on a stock exchange can mitigate the financial constraints of firms, using Japanese firm-level data over the period 1995-2014, controlling for main bank relationships and majority owner influence. Compared to a similar unlisted firm, a listed firm has a lower marginal product of capital and more new borrowings during recessions. Theoretically, we argue that these are the most important variables to uncover differential financial frictions between listed and unlisted firms. However, on average, listed firms do not borrow more over time, but rather maintain lower leverage to mitigate the borrowing constraints.

Suggested Citation

  • Kenichi UEDA & Akira ISHIDE & Yasuo GOTO, 2017. "Listing and Financial Constraints," Discussion papers 17090, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:17090
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    File URL: https://www.rieti.go.jp/jp/publications/dp/17e090.pdf
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    Cited by:

    1. is not listed on IDEAS
    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. Ueda, Kenichi & Sharma, Somnath, 2020. "Listing advantages around the world," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    4. 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).
    5. 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).
    6. 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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