Internal capital market and the growth and survival of Japanese plants in the United States

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This article examines the growth and survival of foreign plants based on a cross-section of Japanese plants in the United States. Results show that plant turnovers are significantly related to plant age and size in a manner highly consistent with the Bayesian learning model of firm dynamics (e.g. Jovanovic [Econometrica 50 (1982) 649]). They also indicate that financial conditions prevailing at the Japanese parent affect plant dynamics importantly, suggesting the working of internal capital markets across the Pacific. Results, however, are ambiguous with regard to the efficiency of internal capital allocation.

Original languageEnglish
Pages (from-to)366-385
Number of pages20
JournalJournal of the Japanese and International Economies
Volume19
Issue number3
DOIs
Publication statusPublished - 2005 Sep
Externally publishedYes

Fingerprint

capital market
turnover
parents
firm
efficiency
learning
Financial condition
Turnover
Firm dynamics
Learning model
Cross section
Capital allocation
Internal capital markets
Bayesian learning

Keywords

  • Firm turnover
  • Foreign direct investment
  • Internal capital market
  • Multinational corporation

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

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abstract = "This article examines the growth and survival of foreign plants based on a cross-section of Japanese plants in the United States. Results show that plant turnovers are significantly related to plant age and size in a manner highly consistent with the Bayesian learning model of firm dynamics (e.g. Jovanovic [Econometrica 50 (1982) 649]). They also indicate that financial conditions prevailing at the Japanese parent affect plant dynamics importantly, suggesting the working of internal capital markets across the Pacific. Results, however, are ambiguous with regard to the efficiency of internal capital allocation.",
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AB - This article examines the growth and survival of foreign plants based on a cross-section of Japanese plants in the United States. Results show that plant turnovers are significantly related to plant age and size in a manner highly consistent with the Bayesian learning model of firm dynamics (e.g. Jovanovic [Econometrica 50 (1982) 649]). They also indicate that financial conditions prevailing at the Japanese parent affect plant dynamics importantly, suggesting the working of internal capital markets across the Pacific. Results, however, are ambiguous with regard to the efficiency of internal capital allocation.

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KW - Internal capital market

KW - Multinational corporation

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