Determinants of Japanese Companies' Financial Attitudes and Behavior - Analysis based on a survey of companies in the Kansai region

In June 2005 we conducted a questionnaire survey of 9,000 companies in the Kansai region (consisting of Osaka, Kyoto, and Hyogo prefectures), which is the second largest economic zone in Japan, and received replies from 2,041. In this research I analyze how the attributes of companies, such as listing status and capital position, influence their dividend policies, awareness of corporate governance, financing behaviour, and selection of banks. Unlike previous research, this research analyzes large amounts of information on unlisted companies and covers not only balance-sheet data but also non-balance-sheet information such as companies' keiretsu and subjective judgments.

As a result, it was evident that the fact of being a consolidated subsidiary or a member of a keiretsu corporate group has a major influence on financial behavior. Therefore, when analyzing the financial behavior of SMEs, it is essential to take into consideration factors such as their keiretsu affiliation. Additionally, it became clear that capital adequacy ratios and corporate scale are also important determinants of the nature of companies' financial behavior.