Capital Investments and Stock Returns in Japan-super-
K.C. John Wei
The negative relation between capital investments and subsequent stock returns, found in the United States, is not observed in Japan, which is inconsistent with the risk-based explanation. More specifically, we find no significant relation between capital expenditures ("CE") and subsequent stock returns for either the entire sample or for "keiretsu" firms. However, in the pre-1990 subperiod, there is a positive relation between increased "CE" and subsequent risk-adjusted returns among independent firms, especially for those firms that have high cash flows and/or low leverage. These results are consistent with existing evidence that independent firms are financially constrained in the pre-1990 period and that "keiretsu" main bank monitoring effectively controls the overinvestment problem. Copyright (c) 2009 The Authors. Journal compilation (c) International Review of Finance Ltd. 2009.
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.