Shareholder Litigation Rights and Bank Dividends

Hiep Ngoc Luu, Tram-Anh Nguyen, Dung Thi Thuy Nguyen, Lan Thi Mai Nguyen () and Edie Johari
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Hiep Ngoc Luu: VNU University of Economics and Business
Tram-Anh Nguyen: Institute of Economics and Strategic Management
Dung Thi Thuy Nguyen: Institute of Economics and Strategic Management
Lan Thi Mai Nguyen: Institute of Economics and Strategic Management
Edie Johari: Universiti Utara Malaysia

Journal of Financial Services Research, 2024, vol. 66, issue 3, No 2, 263-295

Abstract: Abstract We use the staggered adoption of Universal Demand (UD) laws, which significantly reduces the shareholder litigation rights of listed banks incorporated in 23 US states during the period from 1989 to 2005, as a quasi-natural experiment to examine the impact of shareholder litigation rights on bank dividends. The results of the difference-in-difference analysis show that weakened shareholder litigation rights lead to an increase in bank dividends. Further, we find that the impact of UD laws is only evident for banks with greater agency conflicts and higher information asymmetry. However, we find no evidence that litigation rights affect banks’ share repurchases.

Keywords: Shareholder Litigation Rights; Universal Demand Laws; Dividend; Difference-in-Difference (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10693-023-00397-4

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