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Article
Publication date: 7 April 2015

Kimie Harada, Takeo Hoshi, Masami Imai, Satoshi Koibuchi and Ayako Yasuda

This paper aims to understand Japan’s financial regulatory responses after the global financial crisis and recession. Japan’s post-crisis reactions show two seemingly…

Abstract

Purpose

This paper aims to understand Japan’s financial regulatory responses after the global financial crisis and recession. Japan’s post-crisis reactions show two seemingly opposing trends: collaboration with international organizations to strengthen the regulation to maintain financial stability, and regulatory forbearance for the banks with troubled small and medium enterprise [SME] borrowers. The paper evaluates the responses by the Japanese financial regulators in five areas (Basel III, stress tests, over-the-counter [OTC] derivatives regulation, recovery and resolution planning and banking policy for SME lending) and concludes that the effectiveness of the new regulations for financial stability critically depends on the willingness of the regulators to use the new tools.

Design/methodology/approach

This report evaluates the post-crisis responses by the Japanese financial authorities in five dimensions (Basel III, stress tests, OTC derivatives regulations, recovery and resolution planning and bank supervision).

Findings

The effectiveness of the new regulations for financial stability critically depends on the willingness of the regulators to use the new tools.

Originality/value

The paper is the first attempt to evaluate the financial regulatory trends in Japan after the global financial crisis.

Details

Journal of Financial Economic Policy, vol. 7 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 15 March 2011

Kimie Harada and Pascal Nguyen

The purpose of this paper is to test two agency‐based hypotheses regarding the effect of ownership concentration on dividend policy using a large sample of Japanese firms.

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5997

Abstract

Purpose

The purpose of this paper is to test two agency‐based hypotheses regarding the effect of ownership concentration on dividend policy using a large sample of Japanese firms.

Design/methodology/approach

Level regressions associating payout rates to ownership concentration are run. Different measures of payout are used to ensure the robustness of our findings. Endogeneity of ownership is taken into account. The choice of instruments is carefuly motivated and their statistical power and exogeneity are checked. How ownership concentration affects the propensity to increase dividends following changes in variables correlated with free cash flows is also examined.

Findings

The results are consistent with rent extraction by large shareholders. Ownership concentration is associated with significantly lower dividends in proportion to earnings as well as relative to book equity. An endogenous relation between ownership concentration and dividend payout is established, but the results are not statistically different. Firms with concentrated ownership are also less likely to increase dividends when earnings increase or when debt decreases.

Practical implications

Large shareholders do not appear to use dividend policy to remove excess cash and impose greater financial discipline on managers. Instead, the results underline the conflicts of interest between majority and minority shareholders.

Originality/value

The endogeneity of ownership is controlled for using firm age and the industry's average ownership concentration as instruments. The effect of ownership concentration on dividend changes following changes in proxies for free cash flows is also analyzed.

Details

Managerial Finance, vol. 37 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 13 March 2019

N. Jayantha Dewasiri, Weerakoon Banda Yatiwelle Koralalage, Athambawa Abdul Azeez, P.G.S.A. Jayarathne, Duminda Kuruppuarachchi and V.A. Weerasinghe

The purpose of this paper is to identify the determinants of dividend policy in an emerging and developing market.

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3267

Abstract

Purpose

The purpose of this paper is to identify the determinants of dividend policy in an emerging and developing market.

Design/methodology/approach

The study employs a quantitative approach using 191 Sri Lankan firms and 1,337 firm-year observations as the sample. The authors apply a Binary Logistic Regression model to uncover the determinants of the propensity to pay dividends, and a Fixed Effect Panel Regression to investigate the determinants of dividend payout.

Findings

The authors identify past dividend decision, earnings, investment opportunities, profitability, free cash flow (FCF), corporate governance, state ownership, firm size and industry influence as the key determinants of propensity to pay dividends. In addition past dividends, investment opportunities, profitability and dividend premium are identified as the determinants of dividend payout. Moreover, there is a feedback between dividend yield and profitability in one lag and between dividend yield and dividend premium in two lags, as short-term relationships. Hence, past dividend decision or payout, profitability and investment opportunities are a common set of determinants with implications for both propensity to pay dividends and its payout. The findings support theories of dividends such as signaling, outcome, catering, life cycle, FCF and pecking order.

Practical implications

The findings are important for investors, managers and future research. Investors should focus on the determinants identified by our study when making investment decisions whereas managers should practice the same when formulating appropriate dividend policies for their firms. Future research should rely on propensity to pay dividends and its payout simultaneously to promote a theoretical consensus on the dividend determinant puzzle.

Originality/value

This is the first study that investigates determinants of propensity to pay dividends and dividend payout along with short-term relationships in a single study.

Details

Managerial Finance, vol. 45 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

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