Shareholder Structure and Dividend Rate in Japanese Firms:Analysis Using Panel Data

In Japan, the percentage of shareholders has increased while dividend rate has decrease. In previous years, the dividend rate is said to be lower in Japan than in USA or Europe. Dividend rates in Japanese firms could have increased as far as foreign shareholders have increased since most of them are thought to be institutional investors with market orientated commitment. In this paper I use data of manufacturing firms listed by the stock market since 1985 to 2009 splinted in two periods since character of corporate governance is thought to have changed since the second 1985. According to the analysis conclusions are summarized as follows: Foreign shareholders have consistently increased dividend rates since 1985. Moreover, there is no significant relationship between the percentage of financial institutions and dividend rates in the period 1985-1996. However, a reverse trend emerged from the second half of 1990s reflecting that the percentage of trust banks has increased and the commitment of financial institutions has change toward market approach. Additionally, nonfinancial firms had decreased dividend rate only by the late 1990s. This implies that nonfinancial firms had taken a role as stable shareholders changing its interest since then.