What Are The Determinants Of Dividend Policy? The Case Of The Japanese Electrical Appliances Industry

This paper explores the determinants of the dividend policy of firms in the Japanese electrical appliances industry. First, our empirical investigationsreveal that in this industry, corporate managers do not cater to investors’ demands in both their dividend initiation and continuation decisions.Instead, in the Japanese electrical appliances industry, the determinants of firms’ dividend policies are value-weighted dividend yields, valueweightednonpayers’ size, and value-weighted after-tax earnings-to-total-asset ratios. Moreover, cross-sectionally, this paper finds relationsbetween corporate earnings and firm dividend payments in general. However, on an aggregate time-series basis, dividend payments tend todecrease company earnings in the Japanese electrical appliances industry, and this means rejection of the traditional signaling hypothesis.