TY  - JOUR
AU  - Hall,Brian J.
AU  - Weinstein,David E.
TI  - The Myth of the Patient Japanese: Corporate Myopia and Financial Distress in Japan and the US
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5818
PY  - 1996
Y2  - November 1996
UR  - http://www.nber.org/papers/w5818
L1  - http://www.nber.org/papers/w5818.pdf
N1  - Author contact info:
Brian Hall
Harvard Business School
Baker Library 185
Boston, MA  02163
Tel: 617/495-5062
Fax: 617/496-7379
E-Mail: bhall@hbs.edu

David Weinstein
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY  10027
Tel: 212/854-6880
Fax: 212/854-8059
E-Mail: dew35@columbia.edu
AB  - It is widely believed that the stock-market oriented US financial system forces corporate managers to behave myopically relative to their Japanese counterparts, who operate in a bank-based system. We hypothesize that if US firms are more myopic than Japanese firms, then episodes of financial distress (when myopia should be most pronounced) should cause US firms to decrease their R&D spending (our main proxy for long-term investment) more than Japanese firms.  We find no evidence that this is the case.  In addition, we show that Japanese firms do not invest more than US firms after the onset of distress.  Our results hold up even when US firms are compared to Japanese financial ties to their banks and are thought to be the least myopic (and the most able to weather distress). The results also withstand a variety of robustness checks.  Our findings that US and Japanese firms respond similarly to financial distress cast doubt on the view that US managers are more short-sighted than their Japanese counterparts.
ER  -