Investment and financing decisions of the corporation




Kuribayashi, Satoshi

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The main purpose of the present study is to contribute towards a systematic investigation of the financial behaviour of corporations in a growing capitalist economy. The present study follows a simplified, fundamental approach to an understanding of the subject. While the thesis puts the special emphasis on the empirical study in Part II, the chapters in Part I on methodological and epistemological discussions are not less important from the standpoint of the well-balanced trilogy of methodology, theory, and verification in empirical sciences. In Part II, no explicit assumptions are made on markets and investors, because these assumptions seem fragile, particularly in explaining the dynamic behaviour of corporations in a disequilibrium context. Part II is a factfinding part whose major aim is to obtain meaningful results free from popular views and textbook analyses. The purpose of Part I is to clarify the epistemological and methodological stance of the thesis. The aim of Chapter 2 is in gaining a general idea on crucial points of scientific methodologies recently developed ln the field of philosophy of science when applied to the explanation of the history and structure of economic theory. Chapter 3 surveys the literature with an intention of making the position of the thesis clear. It contains a critical look at the neoclassical theory of the firm and the theory of finance, and a review of recent contributions to a better understanding of the market and the firm. Further comments on epistemological issues are given in Chapter 4. The purpose is not to construct a coherent methodology but to present and arrange different ways of economic thinking, e.g., the neoclassical paradigm, fundamentalist Keynesians arid ,Veblertism. Part II is devoted to the empirical study of the financial behaviour of corporations ln a growing capitalist economy. Chapter 5 takes up some institutional problems which may be relevant to the subsequent chapters. The analysis is confined to Japanese corporations, because the dynamic financial behaviour of the corporation in a disequilibrium context can be best described by that of Japanese corporations since World War II and they may have been significantly affected by some insitutional factors. Chapter 6, i~ turn, attempts to verify the validity of several alternative models in explaining the financial behaviour of Japanese manufacturing corporations under the rapid economic growth period. Chapter 7 shifts to a study of the changing pattern of the Japanese individual investors with a special reference to their degree of involvement in the stock market. The purpose of the chapter is to examine which financial variables as well as some institutional regulations are considered to be the most significant factors affecting the changing pattern of Japanese individual investors. Finally, Chapter 8 attempts to derive meaningful proporitions concerning the structural characteristics of the financial behaviour of Japanese corporations based upon an approach somewhat different from standard econometric techniques . To be consistent as much as possible with the epistemological stance enunciated in Part I, the approach should be descriptive, inductive, objective, and positive rather than mathematical, deductive, subjective, and normative. The main results are summarised as propositions concerning the financial behaviour of Japanese corporations some of which may be compatible with the results in the foregoing chapters. The thesis does not intend to be a clear exposition taking account of every relevant descriptive aspect of non-neoclassical economics, e.g., post-Keynesian approach, while the epistemological stance of the thesis may be said to be closer to that of Keynes than to that of the orthodox neoclassical school . For example, as seen in Part II, the thesis does not treat explicitly the relationship between uncertainty, disequilibrium and dynamics in developing - empirical analyses. Satisfactory methodology in this area seems not to have been available yet, although some insight is given below . The style in Part I is somewhat exegetical reflecting this situation.






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