Production Offshoring and Investment by Japanese Firms

Joong Kang and Shi Piao

No 2015/183, IMF Working Papers from International Monetary Fund

Abstract: We trace Japanese corporate investment across different types of firms over the past decades and estimate the main determinants of investment. We find that there are differences in investment behavior between firms expanding abroad and those operating mainly in domestic markets. On the back of a trend increase in production offshoring, investment by large companies, especially those in the transportation sector, is more positively associated with cash flow while responding less to Q ratio. These findings are consistent with the subdued recovery of private investment in recent years despite booming stock markets and the large build up of cash holdings by Japanese corporates.

Keywords: WP; firm; investment; bank borrowing; investment behavior; Japan; Capital; Offshoring; Economic growth; firms in the transportation sector; Japanese firm; expectations of demand growth; leverage ratio; Currencies; Corporate investment; Manufacturing; Private investment; Global financial crisis of 2008-2009; Global (search for similar items in EconPapers)
Pages: 20
Date: 2015-07-30
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Citations: View citations in EconPapers (2)

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