Do Asymmetric Information and Ownership Structure Matter for Dividend Payout Decisions? Evidence from European Banks

Laetitia Lepetit, Céline Meslier-Crouzille () and Leo Indra Wardhana ()
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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 or dispersed ownership structure pay lower dividends when they have high degrees of opacity. These results would be consistent with the entrenchment behavior hypothesis, with insiders (managers or majority shareholders) paying lower dividends to extract higher levels of private benefits when banks' opacity is high. Higher levels of shareholder protection and stronger supervisory regimes help to constrain entrenchment behavior of majority shareholders. Our findings have critical policy implications for the Basel 3 implementation of restrictions on dividend payouts.

Keywords: Bank; dividend; ownership concentration; asymmetric information (search for similar items in EconPapers)
Date: 2015-08-13
New Economics Papers: this item is included in nep-ban
Note: View the original document on HAL open archive server: https://unilim.hal.science/hal-01186722
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01186722

DOI: 10.2139/ssrn.2643523

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