Multivariate Analyses of Factors Affecting Dividend Policy of Acquired European Banks

Abstract:     
Dividends, particularly of acquired banks are influenced by several structural adjustments especially after mergers. The paper evaluates the various factors affecting dividend of both acquired and non-acquired banks. Using data from 120 large mergers and acquisitions in Europe, the study finds that while the levels of liquidity, risk, composition of the financial structure are pertinent factors in the dividend policy of banks, the price earning (PE) ratio is specifically fundamental to non-acquired banks. The significance of the variable in the non-acquired banks indicates that growth in bank investments and future projects exert more aggressive impact on banks that are not acquired or less likely to merge. This finding is novel as previous studies on dividend policy do not make this distinction.

Number of Pages in PDF File: 20

Keywords: dividend, yield, bank mergers, acquired

JEL Classification: G14, G21, G24, 34

working papers series