Management Disclosure of Long-term Payout Targets, Firm Performance and Corporate Governance

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Corporations' management have long been thought to maintain long-term dividend payout targets, but there is little evidence on what these targets are or how they evolve over time. This project is developing a database of voluntary long-term payout target disclosures by publicly-listed Japanese firms. The properties of voluntarily disclosed payout targets and their relationships with firm performance, stock returns, actual payouts, bankruptcy risk and corporate governance characteristics is being investigated.So far, the project has progressed as follows. Data on Japanese firms' voluntary payout target disclosures in the Yukashouken Houkokusho (有価証券報告書), known as the Yuho, has been collected and extended using textual analysis techniques. The data has been checked, cleaned and verified by both computational and manual human methods. This exposed some anomalous and ambiguous instances in the machine collected target data. The textual analysis methods used for collection were improved and additional information reflecting the context of the voluntary target disclosure statements was collected so that any anomalous data can be efficiently resolved. A large database of firm-level financial and governance data is being assembled from data vendors, and this is partially complete at present. Some initial time series and cross-sectional analyses of the payout targets have been completed.