Hideaki Kiyoshi Kato

Dividend policy, cash flow, and investment in Japan

This study provides evidence in support of the cash flow information (CFI) hypothesis focusing on the Japanese firms. Dividend changes indeed convey information about the firm’s cash flows. Although the free cash flow hypothesis is to some degree supported by the evidence in firms’ investment behavior, dividend policy is not used by Japanese firms to control the overinvestment problem. In addition, the dividend clientele effect does not appear significant around dividend announcements in Japan. Given the specific institutional features of the Japanese market, we find that investment spending is very sensitive to liquidity constraints for nonkeiretsu firms, but not so for keiretsu firms. D 2002 Elsevier Science B.V. All rights reserved.

The Confucian Roots of Business Kyosei

Kyosei, a traditional Japanese concept, has been applied to a variety subjects, from biology to business. It has more recently become synonymous with the concepts of corporate responsibility, ethical decision making, stakeholder maximization, and responsible reciprocity. The purpose of this paper is to trace kyoseis modern business application back to ancient Confucian thought. The ideals associated with Confucianism were instrumental in the creation of Japanese business codes of ethics during the early part of the seventeenth century. A short history of this period is presented to provide a contextual framework for understanding these codes. A specific code of ethics, called the shuchu kiyaku, is presented for the first time in English and shown to have direct roots in Confucian writings. Statements from modern company codes and from modern Japanese and American businessmen are presented to reflect the philosophy of business embodied in that ancient code of ethics.

Molecular weight heterogeneity of bovine serum transferrin

Cattle transferrin (Tf) was purified from serum of variant A and four bands were isolated. The peptide patterns of these bands when cleaved by proteases and by cyanogen bromide (BrCN) were compared, using sodium dodecyl sulfate-polyacrylamide gel electrophoresis (SDS-PAGE). Variant A displays two groups of molecules—large (L) and small (S)—on SDS-PAGE; the molecular weight of the L bands is 78,400±1700 and that of the S bands is 72,000±1700. However, S-band molecules could not be produced artificially by heat treatment of L bands in the presence of SDS and 2-mercaptoethanol. Since deglycosylated Tf also showed molecular weight heterogeneity, the sugar moieties of Tf other than sialic acids were not the cause of the heterogeneity. These results suggest that heterogeneity within a given variant is due to the presence of two kinds of molecule of different molecular weight. The peptide patterns of L and S bands produced by proteases and those produced by BrCN were distinctly different from each other. However, the stepwise degradation patterns of L and S bands resembled each other when treated with both chymotrypsin and BrCN. This suggests that L-band molecules differ from S-band molecules only in the presence of an additional carboxyl-terminal peptide.

Phylogenetical and ontogenetical studies on the molecular weight heterogeneity of bovine serum transferrin

Antitransferrin (Tf) rabbit serum was highly specific: it reacted with Tfs of ruminants, such as European breeds and Zebu breeds of cattle, Bali cattle, banteng, swamp and river types of water buffalo, anoa, goat, sheep, deer, antelope, camel, and giraffe, but did not react with serum of other non-ruminant species, such as pig, wild boar, hippopotamus, horse, rabbit, rat, chicken, etc. Electrophoresis of Tf and immunoglobulin G (IgG) complexes was carried out using sodium dodecyl sulfate-polyacrylamide gel electrophoresis (SDS-PAGE). Within ruminants, the following species showed two Tf molecules on SDS-PAGE; European and Zebu cattle, Bali cattle, banteng, two types of water buffalo, and two species of anoa. Other ruminants, sheep, goat, deer, antelope, camel, and giraffe, etc., showed only one Tf molecule. The Tf heterogeneity in molecular weight was, thus, restricted to Bos, Bubalus, and Anoa. The molecular weight of Tf of water buffalo was slightly larger than that of cattle on the gel. The peptide pattern from cyanogen bromide cleavage of Tf of the water buffalo differed clearly from that of cattle. Fetal Tf showed only one molecule during development, but a newborn calf has two Tf molecules, (one large and one small) within 18 hr after birth. We suggest, therefore, that the small molecules formed during the last month of gestation. The peptide patterns of adult and fetal Tfs cleaved by cyanogen bromide differed with regard to the two large peptides; fetal Tf, lacking the second-largest peptide, had twice the amount of the largest peptide compared with adult Tf. From these results, we suggest that a change in peptide sequence occurs from the last month of gestation, when the largest peptide is degraded to the second largest. However, a Tf-like protein detected in the liver microsomal fraction has only one molecular size, both in adult and in fetal livers.

Baseline Correction of Diffuse Reflection Near-Infrared Spectra Using Searching Region Standard Normal Variate (SRSNV)

An alternative baseline correction method for diffuse reflection near-infrared (NIR) spectra, searching region standard normal variate (SRSNV), was proposed. Standard normal variate (SNV) is an effective pretreatment method for baseline correction of diffuse reflection NIR spectra of powder and granular samples; however, its baseline correction performance depends on the NIR region used for SNV calculation. To search for an optimal NIR region for baseline correction using SNV, SRSNV employs moving window partial least squares regression (MWPLSR), and an optimal NIR region is identified based on the root mean square error (RMSE) of cross-validation of the partial least squares regression (PLSR) models with the first latent variable (LV). The performance of SRSNV was evaluated using diffuse reflection NIR spectra of mixture samples consisting of wheat flour and granular glucose (0–100% glucose at 5% intervals). From the obtained NIR spectra of the mixture in the 10 000–4000 cm−1 region at 4 cm intervals (1501 spectral channels), a series of spectral windows consisting of 80 spectral channels was constructed, and then SNV spectra were calculated for each spectral window. Using these SNV spectra, a series of PLSR models with the first LV for glucose concentration was built. A plot of RMSE versus the spectral window position obtained using the PLSR models revealed that the 8680–8364 cm−1 region was optimal for baseline correction using SNV. In the SNV spectra calculated using the 8680–8364 cm−1 region (SRSNV spectra), a remarkable relative intensity change between a band due to wheat flour at 8500 cm−1 and that due to glucose at 8364 cm−1 was observed owing to successful baseline correction using SNV. A PLSR model with the first LV based on the SRSNV spectra yielded a determination coefficient (R2) of 0.999 and an RMSE of 0.70%, while a PLSR model with three LVs based on SNV spectra calculated in the full spectral region gave an R2 of 0.995 and an RMSE of 2.29%. Additional evaluation of SRSNV was carried out using diffuse reflection NIR spectra of marzipan and corn samples, and PLSR models based on SRSNV spectra showed good prediction results. These evaluation results indicate that SRSNV is effective in baseline correction of diffuse reflection NIR spectra and provides regression models with good prediction accuracy.

Managerial Overconfidence: Evidence from Japanese CEOs

We test whether Japanese leading CEOs are optimistic and miscalibrated using 50 years of survey data conducted by the Nihon Keizai Newspaper on New Year’s Day. In a sense, this study is a complement to Ben-David, Graham and Harvey (2010), who find U.S. executives are severely miscalibrated using the 10 years of survey data. Our unique Japanese data provide an opportunity to examine CEO miscalibration under a different setting over a longer period of time. Though we use a completely different data set, our results are similar to Ben-David, Graham and Harvey (2010). However, we find several important differences. One of the interesting findings is the clear contrast of forecasts by CEOs between two different periods of Japanese economy: more conservative during the high growth period and more optimistic during the low growth period. Contrary to US CFOs, Japanese CEOs predict current trend would reverse. We also find Japanese CEOs are more optimistic and less miscalibrated than their U.S. counterparts. Corporate investment does not seem to increase with either optimism or miscalibration unlike the U.S. The performance of the portfolio based on CEOs’ recommendation is not better than the market average.

Does Divergence of Opinion Affect Stock Returns? Evidence from Japanese SEOs

The divergence of opinion model originally proposed by Miller (1977) has recently received a great deal of attention. Focusing on the unique offering process of Japanese seasoned equity offerings (SEOs), we are able to directly test the Miller model. A comparable analysis cannot be performed on U.S. SEOs. We find our proxy for divergence of opinion is negatively related to stock returns on both the announcement day and the issue day. This implies that the demand curve for the issuing firm’s common stock steepens as the dispersion of opinion for a stock widens. We find that issue size is also related to stock returns on both dates. The relation is stronger for stocks with higher dispersions of opinion. This finding is consistent with Miller’s prediction. We also show that short sales constraints cause market underreaction. Further, we show that manipulative short selling is concentrated around the price determination day. However, our results regarding opinion divergence are free from the manipulative short selling effect.

IPO MECHANISMS: A COMPARISON OF BOOK-BUILDING, DISCRIMINATORY PRICE AUCTIONS AND UNIFORM PRICE AUCTIONS

Using data from the U.S., Japan and Israel, we test two hypotheses suggested by theory regarding the comparison of book-building and auction IPO mechanisms. Our results are inconsistent with both hypotheses. We find that underpricing is higher under book-building than under auctions, even after attempting to control for market conditions, firm size, lead underwriter and information gathered. We also find that higher underpricing is associated with less pricing accuracy in the U.S. and that U.S. IPO aftermarket prices are less accurate than Japanese prices, using both aftermarket volatility and long run returns as indicators of accuracy.