Abstract
This study aims to identify the different financial behaviors of stock-listed companies in Japan and the United States, focusing on the perspectives of the Return on Equity (ROE) ratio and company default. Previous studies have mainly examined areas in profitability and returns to shareholders in Japan and the USA, so there have been criticisms that Japanese companies have not considered shareholders’ interests, compared to the USA. This study adds a credit risk perspective to previous studies while acknowledging the issue that Japanese companies have lower profitability and shareholder returns. Furthermore, this research reveals that the highest principle of the ROE ratio in the USA is also a problem. Fifty listed companies were randomly selected from both Japan and the USA before a comparative analysis of the 100 companies was performed. The results show that companies in the US have higher profitability and ROE ratios, which, however, they externally flow out to increase shareholder returns, resulting in a larger number of defaulted stock-listed companies. On the contrary, Japanese companies have lower profitability, but there is a correlation between the growth of retained earnings and equity, causing lower shareholder returns but maintaining a very low number of defaulted stock-listed companies.
