Do Firms Consider Stakeholder Interests as a Means to Create Shareholder Value or as the Ultimate Goal? Evidence from Japanese Dividend Policies

By using data on Japanese firms, this study investigates empirically whether value creation for non-shareholder stakeholders can be interpreted as a means to maximize shareholder value or is in itself the ultimate goal. We examine the impact of stakeholder management on firms' dividend policies. Because a firm's board of directors determines whether and how much to pay dividends, we use dividend policies as appropriate measures of firms' orientations toward shareholder value maximization. Our findings show no relationship between stakeholder management and dividend policies in most estimations. However, we find some evidence of a positive relationship between stakeholder management and dividend policies for firms with negative earnings. The overall results suggest that providing value to non-shareholder stakeholders is not the ultimate goal of stakeholder management