Are Japanese companies less risky and less profitable than US companies? Evidence from a matched sample

Jiangtao Fu, Yoshiaki Ogura

Research output: Contribution to journalArticle


We reexamine the differences in the profitability distributions of listed companies in the United States and Japan. To control for cross-country differences in the industrial composition, firm size, and firm age distribution, we construct a matched sample using Mahalanobis nearest neighbor matching with respect to these factors. The matched sample supports the finding of existing studies that the median and the standard deviation of profitability are significantly higher in the United States than in Japan. Our matched panel data indicate that this difference arises from both larger firm heterogeneity and more intensive risk-taking in the United States. The sector-by-sector analysis shows that the standard deviation gap is larger in the sectors with more intensive churning in asset-size ranking.

Original languageEnglish
Article number100960
JournalJapan and The World Economy
Publication statusPublished - 2019 Sep 1



  • Allocative efficiency
  • Firm heterogeneity
  • Risk-Taking

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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