ABSTRACT
This chapter focuses on corporate financing and examines modern corporations financial behavior from the standpoint of the stakeholder model. In the field of corporate finance, the question of how firms choose their financing methods has been treated as an issue associated with firms capital structure, and numerous theoretical and empirical studies have been conducted based on this approach. It provides an overview of the financing behavior of major Japanese firms over more than thirty years and considers to what extent the trade-off theory and the pecking-order theory can explain this behavior. Corporate finance textbooks discuss the pecking-order theory along with the trade-off theory as a standard framework for understanding firms financing choices. These theories assume that firms decide their financing sources with the aim to maximize shareholder value. To understand Japanese firms financing behavior, it goes without saying that one needs to recognize the financial environment surrounding them.
