The Open Business Journal

2011, 4 : 1-13
Published online 2011 February 03. DOI: 10.2174/1874915101104010001
Publisher ID: TOBJ-4-1

Exploring the Corporate Dividend Payment Behavior of the Japanese Chemicals Industry Firms

Chikashi Tsuji
Graduate School of Systems and Information Engineering, University of Tsukuba, 1-1-1 Tennodai, Tsukuba, Ibaraki 305-8573 Japan

ABSTRACT

This article explores the corporate dividend payment behavior of the Japanese chemicals industry firms. According to our empirical examinations, the Japanese chemicals industry firms do not cater to investors’ dividend demands when they decide both their dividend initiations and continuations. Instead of catering factor, in this industry, our empirical examinations reveal that the determinants of corporate dividend policies are value-weighted size, valueweighted dividend yields, and value-weighted nonpayers’ or payers’ market-to-book ratio. In addition, although our crosssectional tests generally imply the relations between corporate dividend payments and firm earnings, on an aggregate time-series basis, dividend initiations tend to decline corporate earnings in the following year in this Japanese industry. This evidence can be interpreted as the denial of the traditional signaling hypothesis of dividend policy in the Japanese chemicals industry firms.