Equity Financing and Gearing in the U.K., U.S., Japan, and Israel

The average degree of gearing in manufacturing companies in Japan and Israel is consistently higher than that of their British or American counterparts. Although the firms in these countries operate within widely diverging socio-political frameworks, this financial behavior can be explained by economic variables. The introduction of common economic conditions would result in a similar financial behavioral pattern in these countries despite the socio-political differences. These findings may serve as a basis for further research and discussion with a view to relating changes in financial thinking, the various stages of the business cycle through which any economy passes, and the modification of social goals to the degree of gearing in the individual firm in a particular economy.