Appended Note 2-1 Determinants of Debt Ratio

1. Outline
    Determinants of debt ratio are analyzed using financial data of individual companies in Japan, the US, and the EU, in order to analyze how companies' debt ratio is determined.

2. Data
    Data for Japan is obtained from "Financial Quest" (Nikkei NEEDS), and data for the US and the EU (15 countries) from "Osiris" (Bureau van Dijk). Among companies excluding finance and insurance companies that do not have any defects or abnormal values for necessary items, data for Japan covers 1,134 companies listed in the First Section of the Tokyo Stock Exchange, data for the US covers 1,493 listed companies with total assets of 200 million dollars or more, and data for Europe covers 940 listed companies in 15 former EU countries. Estimates are made based on unconsolidated financial statement data from 1991 to 2004 for Japan, and consolidated financial statement data from 2001 to 2004 for the US and the EU.

3. Estimation Method and Results of Analysis
    Estimates are made using the GMM of Arellano and Bond.