Growth Opportunities, Capital Structure and Dividend Policies of Japanese Firms

Download or read book Growth Opportunities, Capital Structure and Dividend Policies of Japanese Firms written by Ferdinand A. Gul and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper, using 5,308 observations of listed Japanese firms between the years 1988-1992, provides additional evidence on contracting theory arguments for the relationships between growth opportunities, capital structure and dividend policies. In order to avoid the problems of using cross-sectional proxies for time-sequenced variables, this study used (1) pooled cross-sectional time-series and (2) time-series with a one-year lag for the dependent variables. Results which are consistent with contracting cost arguments showed that there were significant negative relationships between growth opportunities and levels of debt financing and dividend yields, respectively, after controlling for firm size and profitability. In addition, consistent with theory, it was found that there were more large firms in the nongrowth category than there were in the growth category. There were also no differences in profitability between growth and nongrowth firms.