The Cost of Capital in Japan: Recent Evidence and Further Results

Albert Ando and Alan Auerbach

No 3371, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We extend our recent work measuring the cost of capital in Japan and the United States by considering several questions that such results raised. Among our findings are: (1) The small firm - large firm distinction appears to be more significant in Japan, not in the United States; (2) Correcting Japanese accounting statements for cross-holding raises the estimated Japanese cost-of-capital by about 1 percentage point; (3) Correcting Japanese accounting statements for unmeasured returns to land has a significantly more important effect: the most conservative correction we attempt raises the implied Japanese return to capital to parity with the United States during the mid-1980's.

Date: 1990-05
Note: ITI ME IFM
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Citations: View citations in EconPapers (11)

Published as Journal of the Japanese and International Economies, Vol. 4, No. 4, pp. 323-350, (1990).

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