Does Comprehensive Income Influence Dividends? Empirical Evidence from Japan

Kunio Ito and Takuma Kochiyama ()
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Kunio Ito: Hitotsubashi University
Takuma Kochiyama: Hitotsubashi University

A chapter in International Perspectives on Accounting and Corporate Behavior, 2014, pp 107-125 from Springer

Abstract: Abstract This study examines whether comprehensive income (CI) and other comprehensive income (OCI) influence dividends of Japanese companies. While CI is considered to be the new “bottom line” of income statements of companies, the impact on dividends has not been examined empirically. Lintner (1956. The American Economic Review, 46, 97–113) and subsequent studies predict that only earnings that are more persistent and less volatile are related to dividends. Contrary to this prediction, our findings suggest that both CI and OCI have positive coefficients with dividend changes. Moreover, we further find that negative OCI is more likely to result in lower dividends. We propose several explanations for our findings.

Keywords: Comprehensive income; Dividend; Earnings persistence; Fair value accounting; Other comprehensive income (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advchp:978-4-431-54792-1_5

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DOI: 10.1007/978-4-431-54792-1_5

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