Dividends, asymmetric information, and agency conflicts: evidence from a comparison of the dividend policies of Japanese and U.S. firms

Article Abstract:

We compare dividend policies of U.S. and Japanese firms, partitioning the Japanese data into keiretsu, independent, and hybrid firms. We examine the correlation between dividend changes and stock returns, and the reluctance to change dividends. Results are consistent with the joint hypotheses that Japanese firms, particularly keiretsu-member firms, face less information asymmetry and fewer agency conflicts than U.S. firms, and that information asymmetries and/or agency conflicts affect dividend policy. Japanese firms experience smaller stock price reactions to dividend omissions and initiations, they are less reluctant to omit and cut dividends, and their dividends are more responsive to earnings changes. (Reprinted by permission of the publisher.)

Research, Japan, Dividends, Corporate governance, Agency theory

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Dividend Changes and Security Prices

Article Abstract:

The information and wealth transfer effect of dividend changes are evaluated as to their relationship to dividend payments. Signalling is found to be the primary influence of security prices in connection with dividend change announcements. Unexpected dividend increases are related to positive returns.

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An Examination of the Empirical Relationship Between the Dividend and Investment Decisions: A Note

Article Abstract:

Causal tests are utilized to determine a relationship between investment decisions and dividend decisions. Confirmation is obtained of the previously established separation principle. No jointness is observed.

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