TITLE

Testing the Catering Theory of Dividends: The Case of the Japanese Chemicals Industry

AUTHOR(S)
Tsuji, Chikashi
PUB. DATE
July 2010
SOURCE
Interdisciplinary Journal of Contemporary Research in Business;Jul2010, Vol. 2 Issue 3, p168
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
We test the catering theory of dividends using data from firms in the Japanese chemicals industry. Our empirical investigations reveal that, in the Japanese chemicals industry, corporate managers do not consider catering behavior in either their dividend initiation decisions or their continuation decisions. This result is particularly important because it is different from existing evidence for the US. We also find that one of the most important determinants of dividend initiations among Japanese chemicals industry firms is the value-weighted dividend yield in the industry. Namely, we find that after the value-weighted dividend yield declines, Japanese firms in the industry tend to initiate or continue dividend payments.
ACCESSION #
58737214

 

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