Bank Dividends, Agency Costs and Shareholder and Creditor Rights

45 Pages Posted: 28 Apr 2016 Last revised: 1 Aug 2016

See all articles by Laetitia Lepetit

Laetitia Lepetit

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE)

Céline Meslier

Universite de Limoges, LAPE

Frank Strobel

University of Birmingham - Department of Economics

Leo Wardhana

Universitas Gadjah Mada

Multiple version iconThere are 2 versions of this paper

Date Written: April 27, 2016

Abstract

Using data on listed bankes in 51 countries, we analyze whether banks’ dividend payouts are influenced by the relative strengths of the agency conflicts faced by their shareholders and creditors. We show that dividend policy depends on the relative strengths of these agency conflicts, but with a more decisive role played by the agency cost of equity than the one of debt, in contrast to results found in the literature on non-financial firms. We then further investigate whether those relationships are shaped by differences in funding structure, levels of capitalization and capital stringency, and potential differences in external corporate governance mechanisms.

Keywords: bank dividend, agency conflict, corporate governance, regulatory environment

JEL Classification: G21, G28, G32, G35

Suggested Citation

Lepetit, Laetitia and Meslier, Celine and Strobel, Frank and Wardhana, Leo, Bank Dividends, Agency Costs and Shareholder and Creditor Rights (April 27, 2016). Available at SSRN: https://ssrn.com/abstract=2770982 or http://dx.doi.org/10.2139/ssrn.2770982

Laetitia Lepetit

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE) ( email )

5 rue Felix Eboue
BP 3127
Limoges Cedex 1, 87031
France
+33555149213 (Phone)

HOME PAGE: http://www.unilim.fr/lape/

Celine Meslier (Contact Author)

Universite de Limoges, LAPE ( email )

5 rue Félix Eboué BP3127
LIMOGES, 87031
France

Frank Strobel

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

HOME PAGE: http://www.economics.bham.ac.uk

Leo Wardhana

Universitas Gadjah Mada ( email )

Bulaksumur
Yogyakarta, 55281
Indonesia

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