Ethics of Japanese Stock Companies' Practice on Appropriating Profits : Retrospective and Prospective Views

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  • 日本企業における利益処分の倫理 : 回顧と展望(自由論題)
  • 日本企業における利益処分の倫理--回顧と展望
  • ニホン キギョウ ニ オケル リエキ ショブン ノ リンリ カイコ ト テンボウ

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In the early years of Meiji Period (1868-1912), Japanese companies kept legal reserves from profits, and distributed the remaining to stockholders and directors as dividends and bonuses. Therefore, dividend yields tend to be changeable, but at a higher rate than today. Since the end of World War II, 'stabilizing dividends 'has prioritized and been taken as virtue, although this resulted in lowering its yield. Tokyo Style is one of the typical companies that adopted 'stabilizing dividends' manner. At its annual general meeting in May 2002, stockholders proposed the company to distribute retained profits that had accumulated for many years.The company was able to reject the plan by a narrow majority, but the question on appropriation of profits remained. So far, companies have fixed dividend yields at a comparatively low rate and vaguely recognized the difference of profits and dividends payable as retained profits. However, when a loss arises from assets purchased with this profits, it is not clear who is responsible for the loss. Therefore in the future, decisions on the amount of retained profits should come before dividends to resolve this matter.

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