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On the Determinants of Corporate Cash Holdings in Japan: Evidence from Panel Analysis of Listed Companies [in Japanese]


  • Koichi Ando
  • Keiichi Hori
  • Makoto Saito


Exploiting dramatic changes in individual corporate behavior as well as macroeconomic environment for the period between 1982 and 2005, this paper empirically investigates the determinants of corporate cash holdings using the panel data of the companies listed at the three major stock exchanges. We find that like in Pinkowitz and Williamson (2001), the rent extraction by banks over industry firms promoted corporate cash holdings in the early 1980s. However, the weakened bank power was not responsible for a drastic decrease in the cash/asset ratio observed during the first half of the 1990s. Instead, the ratio declined as a consequence of the contraction of investment opportunities, the buildup of business credits as an alternative financial instrument, less needs for dividend payments, and higher costs of cash holdings.

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  • Koichi Ando & Keiichi Hori & Makoto Saito, 2009. "On the Determinants of Corporate Cash Holdings in Japan: Evidence from Panel Analysis of Listed Companies [in Japanese]," Global COE Hi-Stat Discussion Paper Series gd09-081, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd09-081

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    Cited by:

    1. repec:mof:journl:ppr14_03_01 is not listed on IDEAS
    2. Galen Sher, 2014. "Cashing in for Growth; Corporate Cash Holdings as an Opportunity for Investment in Japan," IMF Working Papers 14/221, International Monetary Fund.
    3. SHINADA Naoki, 2012. "Firms' Cash Holdings and Performance: Evidence from Japanese corporate finance," Discussion papers 12031, Research Institute of Economy, Trade and Industry (RIETI).

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