What drives the profitability of Japanese multi-business corporations? A variance components analysis

Yoshitaka Fukui and Tatsuo Ushijima

Journal of the Japanese and International Economies, 2011, vol. 25, issue 2, 1-11

Abstract: This article decomposes the business-level profit rate of Japanese multi-business corporations by performing a variance components analysis on a large sample of publicly traded non-financial firms in 1998-2003. Consistent with US evidence, estimation results demonstrate that profitability is predominantly determined by business-level factors, not corporate-level ones, suggesting that a typical multi-business corporation in Japan is a combination of relatively distinct businesses in terms of profit.

Keywords: Profitability; Variance; component; analysis; Diversification; Japan (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:25:y:2011:i:2:p:1-11

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