Does Agency Cost Model Explain Business Fluctuations in Japan?: An Empirical Attempt to Estimate Agency Cost by Firm Size

Kazuo Ogawa and Hirokuni Uchiyama
Authors registered in the RePEc Author Service: Hirokuni Iiboshi

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: An attempt is made to estimate a state space model of investment and borrowing in a Bayesian framework and extract the unobservable agency cost of Japanese firms by firm size. Our estimates of the agency cost exhibited a declining trend in the late 80s and then switched to an increasing trend in the 90s. We pin down the driving force of agency cost to be the market value of land. Furthermore, we find that investment and borrowing behavior of small firms is very much affected by their agency cost in the late 80s and the 90s. Our evidence demonstrates that imperfection of capital market is notable for small firms in Japan.

Date: 2003-04
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2003/DP0579.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0579

Access Statistics for this paper

More papers in ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka Contact information at EDIRC.
Bibliographic data for series maintained by Librarian ().