Financial Accounting

Summary

This book empirically analyzes the influence of dividend policy of Japanese firms on stock pricing. It consists of two parts. Part I shows the evidence that the market evaluates dividends (including management forecasts of dividends) while considering the time series properties of earnings. For example, increase in dividends with good performance (especially on consolidated basis) has additionally positive information content; on the other hand, increase in dividends with bad performance does not raise stock price, etc. Part II pays attention to a unique dividend of Japanese firms. In Japan, there is an interesting practice, which celebrates the XXth anniversary of the foundation, the new listing, and so on in the form of “increase in dividends”. They are called “memorial dividends (commemorative dividends)”. I call the discretionary dividends adjustments by using the advanced flexibility of the memorial dividends as “discretionary dividend policy”, and analyze the economic importance from a wide range of angles.