(a). Unlike Australian firms, which are always being pressured to by their shareholders to increase their dividends, Japanese firms payout a much smaller portion of their earnings and so enjoy a lower cost of capital.

(b). Unlike new capital, which needs a stream of dividends to service it, retained earnings are essentially free capital.

(c). If a company repurchases shares instead of paying a dividend, the number of hares falls and earnings per share rise. Thus, share repurchase must always be preferred to paying a dividend.