Reducing agency conflicts through bank dividend payout decisions: the role of opacity and ownership structure

Laetitia Lepetit, Céline Meslier-Crouzille () and Leo Indra Wardhana ()
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Laetitia Lepetit: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Céline Meslier-Crouzille: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Leo Indra Wardhana: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Authors registered in the RePEc Author Service: Celine Meslier Crouzille ()

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Abstract: We empirically examine whether banks' dividend decisions are influenced by their degree of opacity and ownership structure. We find that banks with concentrated ownership structure pay lower dividends when they have high degrees of opacity, in line with the hypothesis that majority shareholders pay lower dividends to extract higher levels of private benefits. We do not observe such expropriation behaviour from managers in widely held banks. Further analysis shows that higher levels of shareholder protection and stronger supervisory regimes help to constrain opportunistic behaviour of majority shareholders. Our findings have critical policy implications for the Basel 3 implementation of restrictions on dividend payouts.

Keywords: Opacity; Bank; dividend; ownership concentration (search for similar items in EconPapers)
Date: 2018
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Published in Applied Economics, 2018, 49, pp.1-28

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01486548

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