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Empirical Analysis on the Dividend Life-Cycle Theory: Evidence from Japan

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  • Hiroyuki Ishikawa

    (Graduate School of Business, Osaka City University, Japan)

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    Abstract

    This paper aims to clarify a characteristic of the dividend policies of Japanese firms by verifying the dividend life-cycle theory. The analysis revealed that in Japan, growing firms choose further dividend increases compared to mature firms, and that such dividend increases by the growing firms are appreciated by the market more than those by the mature firms. These findings are not consistent with the prediction by the dividend life-cycle theory, but can be interpreted using the concept of corroboration effect.

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    File URL: http://www.rieb.kobe-u.ac.jp/tjar/article/vol1/pdf/3.Ishikawa.pdf
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    Bibliographic Info

    Article provided by Research Institute for Economics & Business Administration, Kobe University in its journal The Japanese Accounting Review.

    Volume (Year): 1 (2011)
    Issue (Month): (December)
    Pages: 39-60

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    Handle: RePEc:kob:tjrevi:dec2011:v:1:p:30-60

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    Related research

    Keywords: Dividend Life-Cycle Theory; Dividend Policy; Corroboration Effect; Signaling; Earnings Predictability;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Eugene F. Fama & Kenneth R. French, . "Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?."," CRSP working papers 509, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    2. Brandon Julio & David L. Ikenberry, 2004. "Reappearing Dividends," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(4), pages 89-100.
    3. DeAngelo, Harry & DeAngelo, Linda & Stulz, Rene M., 2006. "Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory," Journal of Financial Economics, Elsevier, vol. 81(2), pages 227-254, August.
    4. Alex Kane & Young Ki Lee & Alan J. Marcus, 1985. "Earnings and Dividend Announcements is there a Corroboration Effect?," NBER Working Papers 1248, National Bureau of Economic Research, Inc.
    5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
    6. Alon Brav & John R. Graham & Campbell R. Harvey & Roni Michaely, 2003. "Payout Policy in the 21st Century," NBER Working Papers 9657, National Bureau of Economic Research, Inc.
    7. Collins, Daniel W. & Maydew, Edward L. & Weiss, Ira S., 1997. "Changes in the value-relevance of earnings and book values over the past forty years," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 39-67, December.
    8. Louis T. W. Cheng & T. Y. Leung, 2006. "Revisiting the corroboration effects of earnings and dividend announcements," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(2), pages 221-241.
    9. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
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