Abstract
Japanese companies represent a particularly dynamic sector of UK manufacturing industry. High levels of Japanese investment, particularly during the mid-1980s, prompted research into many aspects of Japanese operations such as work and management organisation, personnel management and industrial relations practices. Rather less is known about the financial performance of the Japanese sector, with existing studies tending to concentrate on overall sector productivity based on nationally aggregated Census of Production data. Using the FAME corporate accounts database, this paper examines the performance of a sample of Japanese manufacturing subsidiaries in the UK, with reference to a wide range of financial and performance indicators, against a matched sample of domestic firms. This is supplemented by an analysis of the population of domestic, Japanese and other foreign-owned manufacturing firms on the FAME database. While the empirical analysis confirms expectations on comparative Japanese sector performance on labour productivity, domestic firms are found to exhibit superior performance in respect of profitability, asset efficiency, stock efficiency and credit risk. The paper examines the extent to which UK accounts of Japanese subsidiaries are providing an objective view of their performance, and concludes that Japanese firms may be engaged in transfer-pricing strategies which have the effect of minimising liability to UK corporation tax. The policy implications of these findings are examined.