An empirical research on the formation mechanism of capital structures and dividend policies in Japanese corporations within the framework of the agency theory

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Our main concern is as follows; How can the formation mechanisms of capital structures and dividend policies in Japanese corporations be analyzed within the framework of the agency theory? How can the re-examination of the financial policies of firms be performed using the new framework? We have found some interesting fact.1. Capital StructuresUtilizing the agency theory, we have analyzed the relationship between the manager and the stockholders. The former tries to reduce the agency cost that accrues from the conflict among them when he makes he makes financing decisions.We have made saveral empirical researches on the determinants of capital structures, mainly that of the debt ratio. In our research, we have shown that the business risk and growth rate of sales are important determinants of the debt ratio. In the relationship between the manager and the stockholders, they have various influences on the financing decision of the manager. 2. Dividemd PoliciesJapanese Corporation have the tendency to decide the amount of dividends acording to the 'divideng ratio' rule. Pay-out ratio has no importance in Japan. The ownership structure of shares have an influence on the dividend policy of firms. For example, the diffuser the ownership structure is, the more dividend managers pay. Generally speaking, the dividend policy can be used as the divice to control the agency cost of external capitals.