Does Stock Market Listing Impact Investment in Japan?
Joseph French (),
Ryosuke Fujitani and
No 26495, NBER Working Papers from National Bureau of Economic Research, Inc
We provide the first large sample comparison of investment by Japanese listed and unlisted public firms. We show that listed firms invest more and have greater sensitivity to investment opportunities than comparable unlisted companies. Our findings suggest that the role of listing in alleviating financial constraints is more important than potential underinvestment due to myopic behavior. However, the positive relationship between listing and investment is primarily driven by standalone firms. Further analysis confirms that as the number of subsidiaries in a business group increases the positive impact of listing on investment declines. Additionally, when a firm faces financial constraints listing more positively impacts investment. We also document a positive association between stock liquidity and investment for listed firms. Taken together, our results suggest that stock markets play an important role in easing financial constraints and preventing managerial shirking both of which increase investment. Finally, we show that higher levels of owner-ship by financial institutions, board members, and foreign investors increases corporate investment.
JEL-codes: F3 G20 G31 G39 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-fmk
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Published as Joseph J. French & Ryosuke Fujitani & Yukihiro Yasuda, 2020. "Does Stock Market Listing Impact Investment in Japan?," Journal of the Japanese and International Economies, .
Published as Does Stock Market Listing Impact Investment in Japan? , Joseph J. French, Ryosuke Fujitani, Yukihiro Yasuda. in Financial System, 28th NBER-TCER-CEPR Conference , Fukuda, Ueda, Hoshi, and Allen. 2021
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