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

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.