KEIRETSUS, INFLUENTIAL BANKS, AND FINANCIAL DISTRESS: EVIDENCE FROM JAPAN AND AUSTRIA

Abstract

In this study we examine the likeliness offinancial distress in Austria and Japan. It is argued that both coun- tries are highly comparable in respect to their bank oriented financial systems and that the keiretsu governance system in Japan lowers the probability offinancial distress for memberfirms. We compare the relative probabilities of observed financial distre s between Japan and Austria. Our evidence uggests that the probability offinancial distres is lower in Japanese keiretsu firms relative to Austrian firms. Consistent with our hypothesis, we find that non-keiretsu Japanese firms and Austrian firms have similar probabilities offinancial distress.