Cash Holdings, Dividend Policy, and Stock Return of the Automobile Related Firms at the Tokyo Stock Exchange: Before and After the US Lehman Shock

Abstract

This paper explores the linkage among cash holdings, dividend policies, and stock returns of the automobile related firms at the Tokyo Stock Exchange by employing the panel data analyses. In addition, our research focuses on the two periods: before and after the US Lehman shock. The main findings of our study are as follows. First, 1) before the US Lehman shock, only the internal reserves to total asset ratio is negatively related with the one-year future stock return. Differently from this, 2) after the US Lehman shock, not only the internal reserves to total asset ratio, but also the cash holdings to total asset ratio, the payout ratio, and the plowback ratio are statistically significantly related with the one-year future stock returns.