TY - JOUR
T1 - Are Japanese companies less risky and less profitable than US companies? Evidence from a matched sample
AU - Fu, Jiangtao
AU - Ogura, Yoshiaki
N1 - Funding Information:
We thank Yasuhiro Arikawa, Nobuhiko Hibara, Shin’ichi Hirota, Hideaki Miyajima, Kazunori Suzuki, and Xueping Wu, and the participants at the JSPS Core-to-Core Program workshop (First INCAS Workshop) at École des Hautes Études en Sciences Sociales (EHESS), Paris, June 2015, and the Fourth INCAS Workshop at the Free University of Berlin, September 2018, for their insightful comments. We also thank the anonymous referee of this journal for insightful and constructive comments. We gratefully acknowledge Yue Cai’s research assistance. This study is financially supported by the JSPS Core-to-Core Program and JSPS KAKENHI Grant Number JP15H01958 .
Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/9
Y1 - 2019/9
N2 - We reexamine the differences in the profitability distributions of listed companies in the United States and Japan. To control for cross-country differences in the industrial composition, firm size, and firm age distribution, we construct a matched sample using Mahalanobis nearest neighbor matching with respect to these factors. The matched sample supports the finding of existing studies that the median and the standard deviation of profitability are significantly higher in the United States than in Japan. Our matched panel data indicate that this difference arises from both larger firm heterogeneity and more intensive risk-taking in the United States. The sector-by-sector analysis shows that the standard deviation gap is larger in the sectors with more intensive churning in asset-size ranking.
AB - We reexamine the differences in the profitability distributions of listed companies in the United States and Japan. To control for cross-country differences in the industrial composition, firm size, and firm age distribution, we construct a matched sample using Mahalanobis nearest neighbor matching with respect to these factors. The matched sample supports the finding of existing studies that the median and the standard deviation of profitability are significantly higher in the United States than in Japan. Our matched panel data indicate that this difference arises from both larger firm heterogeneity and more intensive risk-taking in the United States. The sector-by-sector analysis shows that the standard deviation gap is larger in the sectors with more intensive churning in asset-size ranking.
KW - Allocative efficiency
KW - Firm heterogeneity
KW - Risk-Taking
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U2 - 10.1016/j.japwor.2019.100960
DO - 10.1016/j.japwor.2019.100960
M3 - Article
AN - SCOPUS:85066787859
SN - 0922-1425
VL - 51
JO - Japan and The World Economy
JF - Japan and The World Economy
M1 - 100960
ER -