Faculty Scholarship 1994 - Present

Insider Ownership, Financial Leverage, and Dividend Policy in Japanese Corps: An Agency Perspective

In most previous empirical studies, the relationship between the firm's operational characteristics and its insider ownership, debt, and dividend policies is studied independently by using single equation models. However, the firm's insider ownership, debt, and dividend levels are related not only to the firm's operational characteristics but also directly to each other. In this paper, we use a three-stage least squares (3SLS) simultaneous equation model to study the insider ownership, financial leverage, and dividend policy decisions in Japanese corporations from an agency theory perspective.