As a result of Industrial expanding its operations into Europe and Asia, Bentley anticipates an increase in foreign investors in the firm. Which of the following statements regarding international differences in leverage is least accurate? A) Companies in Japan and France tend to have more debt in their capital structure than firms in the U.S. B) Companies operating in countries with weak legal systems tend to have greater agency costs. C) Companies in the U.S. tend to use shorter maturity debt than companies in Japan. D) Companies operating in countries that have active institutional investors tend to have less financial leverage than firms in countries with less of an institutional presence.
I would go with D A = true; B = true; C: not exactly sure, but seems reasonable; I seem to remember Japanese companies have longer relationships with their banks (i.e. keiretsu), and thus the banks would trust them with longer maturity debt. D: Don’t remember this topic; would go with my response from A-C to justify the answer.
A is least accurate
A
C. Companies in Japan use shorter debt than in the US.
A Japan and France use less debt in their capital structure. C is very close too
Correct answer is C.
I hope we don’t get too many of these questions on the exam 
Pink - what reading/section is this from? I don’t think I’ve seen this yet…is it new in the curriculum?
C…US companies love LT debt.
zimzim78 Wrote: ------------------------------------------------------- > Pink - what reading/section is this from? I don’t > think I’ve seen this yet…is it new in the > curriculum? Corporate Finance