An Empirical Comparison of the Corporate Financing Behavior: The Case Study of the Major US and Japanese Firms in the Electrical-related Industries

Abstract

This paper explores the corporate financing behavior of four large electrical-related industry firms in the US and Japan. The interesting findings from our case study are as follows. (1) First, as for Apple Inc. (Apple), our results can be interpreted that the firm raises funds by equity when its market value is high. Further, our empirical results also show that the Apple is considered to finance the funds for R&D and tangible assets mainly by debt rather than equity. (2) Second, regarding International Business Machines Corporation (IBM), the firm is considered to finance the funds for R&D mainly by equity rather than debt; however, the debt ratio of this firm is generally high. (3) Third, as for Panasonic Corporation (Panasonic), the firm is considered to finance the funds for property, plant, and equipment mainly by debt rather than equity, and the rapid increase of its debt ratio is seen in the recent period. (4) Finally, as to Sony Corporation (Sony), the company is considered to finance the funds for property, plant, and equipment and R&D expenses mainly by equity rather than debt whilst its debt ratio is also generally high.