Meric, Gulser; Kyj, Larissa; Welsh, Carol N.; Meric, Ilhan
September 2000
Multinational Business Review (St. Louis University);Fall2000, Vol. 8 Issue 2, p26
Academic Journal
The Japanese financial keiretsu system has received considerable attention in the U.S. business literature. A number of studies have investigated various aspects of the financial keiretsu practice in Japan and the impact of this system on the financial characteristics of Japanese firms. However, there are no studies that compare the overall financial characteristics of the keiretsu-affiliated firms and the independent firms. In this study we attempt such a comparison by using the parametric and nonparametric ANOVA (analysis of variance) techniques and a sample of 224 Japanese firms from 13 manufacturing industries. Due to their ability to borrow from the main bank of the keiretsu with liberal terms, the keiretsu-affiliated firms appear to have significantly higher debt ratios and lower liquidity ratios compared with the independent firms. The keiretsu-affiliated firms are generally larger than the independent firms with more institutional ownership. Although the independent firms have significantly higher operating profit margin and return on assets ratios, the return on equity ratios of the two groups of firms are not significantly different. There are considerable similarities between the two groups of firms in terms of turnover ratios, growth ratios, and market ratios.


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