Dividends and Strength of Japanese Business Group Affiliation
38 Pages Posted: 2 Feb 2012
Date Written: February 1, 2012
Abstract
While the study of dividend policy in Japan has investigated the role of group affiliation, it has heretofore neglected the impact of the strength of group affiliation. Using the strength of group association, a new variable in the study of dividend policy, we document that the probability of dividend payment by firms in Japanese business groups declines as the affiliation to the business group strengthens – a finding consistent with transferring cash from weakly associated firms to those strongly associated with the business group. Further, the contractual claimant position of main banks seems important as the ratio of short-term debt to long-term debt is negatively related to dividend payment in Japanese firms. Finally, we also reconfirm that dividends in Japan are positively related to firm size, profitability, and investment opportunities, and negatively to firm risk. These findings should be of much interest to managers, scholars, and policy-makers.
Keywords: Dividend policy, Japan, Corporate Governance, Business Groups, Tunneling, Panel Data Models
JEL Classification: G14, G35, G36
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?
By Eugene F. Fama and Kenneth R. French
-
Dividends, Share Repurchases, and the Substitution Hypothesis
By Gustavo Grullon and Roni Michaely
-
Payout Policy in the 21st Century
By Alon Brav, John R. Graham, ...
-
Payout Policy in the 21st Century
By Alon Brav, Campbell R. Harvey, ...
-
Financial Flexibility and the Choice between Dividends and Stock Repurchases
By Clifford P. Stephens, Murali Jagannathan, ...
-
By Roni Michaely and Franklin Allen
-
By Joan Farre-mensa, Roni Michaely, ...
-
Payout Policy in the 21th Century: The Data
By Alon Brav, Campbell R. Harvey, ...
-
A Catering Theory of Dividends
By Malcolm P. Baker and Jeffrey Wurgler
-
A Catering Theory of Dividends
By Malcolm P. Baker and Jeffrey Wurgler