Divestitures have the potential to create shareholder value by helping firms optimize their portfolio of assets. Even so, firms do not necessarily take up divestitures because of agency problems. In fact, large controlling shareholders may prefer to extract private benefits of control at the...

We examine the influence of ownership concentration on payout policy in Japan. According to the monitoring hypothesis, large shareholders prefer higher dividends to mitigate the agency cost of free cash flows. In contrast, the rent extraction hypothesis assumes that large shareholders derive...

We use Keiretsu affiliation to analyze the dividend policy of Japanese firms. Assuming that Keiretsu membership provides monitoring benefits and reduces information asymmetries between managers and investors, we test (1) whether dividend changes are more sensitive to growth opportunities for...

We study the capital structure of Japanese firms using a partial adjustment model. To ensure that our approach is well specified and, in particular, that the over-identifying restrictions associated with system GMM are not rejected, our procedure is to partition firms in a number of homogenous...

We construct a governance index based on several attributes known to be associated with good corporate governance. After checking that the index is positively associated with standard indicators of firm performance, we use it to evaluate the returns on governance-sorted portfolios. Our main...

We examine the dividend policy of Japanese firms and find that dividend payout is negatively related to ownership concentration. This result contradicts the argument that dividends are substitute for shareholder monitoring, but supports the assumption that controlling shareholders extract...

In this study, we construct a corporate governance index based on several attributes known for their association with firm profitability and market value. The index is used for evaluating the performance of governance-sorted portfolios. We find that the portfolio of well-governed firms...

We investigate the hypothesis that cash balances have a precautionary motive and serve to mitigate the volatility of operating earnings, which we use as a proxy for risk. Our results show that cash holdings are positively associated with firm level risk, but negatively related to industry risk....

In this paper, I analyze the relationship between financial statements information and stock returns for firms listed on the Tokyo Stock Exchange. Firm-specific information is captured by way of score indicative of the firm's cash flow generating potential. The results show that score-based...