Abstract

This study examines the linkages between corporate solvency and capital structure of the electric appliances industry firms which are listed on the Tokyo Stock Exchange. When we consider and use some theories, different relationships between corporate solvency and leverage ratio are derived. In this study, we clarify that in the Japanese electric appliances industry, the linkages between corporate solvency and debt ratio are generally negative. Further, we also reveal that about 50% to 60% of the ratio of total debt to total asset can be explained by our corporate solvency variables.

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