Increased presence of foreign investors and dividend policy of Japanese firms

Abstract

This paper investigates the impact of the increased presence of foreign investors on the dividend policy of Japanese firms. A choice-to-pay model, estimated with a random-effects binary probit method, shows that a higher level of foreign ownership is associated with a significantly higher probability of dividend payouts. A choice-to-change model, estimated with a random-effects generalized ordered probit method, shows that a higher level of foreign ownership is associated with a significantly higher (lower) probability of an increase (no change) in dividends, while a larger 1-year increase is associated with a significantly higher (lower) probability of an increase (decrease).