Dividend Policy of Bank Initial Public Offerings

Abstract:     
This paper investigates the short-term valuation effects and the long-run performance of bank initial public offerings in the United States from 1972 to 1997. Overall, the empirical results provide significant evidence that the dividend policy of bank IPOs differ from that of non-banks. The dividend policy of bank IPOs has a significant impact on the long-run performance. Most importantly, banks that later on were acquired outperform the benchmark significantly and banks that continue to operate independently as well as banks that eventually failed both under-perform. Moreover, the beginning of the dividend payment is an important characteristic that separates the out-performers from the under-performers.

Keywords: dividend policy, bank, initial public offerings

JEL Classification: G21, G35

Accepted Paper Series