Understanding Bank Payouts During the Crisis of 2007-2009

83 Pages Posted: 24 Jun 2015 Last revised: 6 Apr 2022

See all articles by Peter Cziraki

Peter Cziraki

University of Toronto - Department of Economics; Tilburg Law and Economics Center (TILEC)

Christian Laux

Vienna University of Economics and Business; Vienna Graduate School of Finance (VGSF); European Corporate Governance Institute (ECGI)

Gyongyi Loranth

University of Vienna; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 27, 2022

Abstract

We study U.S. banks’ payout policy in 2007-2008. We benchmark these payouts against payouts before the crisis, measure stock price reactions to announcements of dividend changes, and analyze changes in the relation between payout growth and future performance. Further, we examine cross-sectional variation in banks’ payout policy to gauge the possible motives underlying banks’ payout decisions in 2007-2008. We do not find that banks that have a higher willingness to take risk or that have higher incentives to undertake asset substitution use their payout policy to engage in more wealth transfer compared to other banks.

Keywords: dividends, total payout, financial crisis, insider trading

JEL Classification: G21, G24, G28, G32, G35

Suggested Citation

Cziraki, Peter and Laux, Christian and Loranth, Gyongyi, Understanding Bank Payouts During the Crisis of 2007-2009 (January 27, 2022). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 480/2016, TILEC Discussion Paper No. 2016-019, Review of Corporate Finance Studies, forthcoming, Available at SSRN: https://ssrn.com/abstract=2621772 or http://dx.doi.org/10.2139/ssrn.2621772

Peter Cziraki (Contact Author)

University of Toronto - Department of Economics ( email )

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HOME PAGE: http://www.economics.utoronto.ca/petercziraki

Tilburg Law and Economics Center (TILEC) ( email )

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Christian Laux

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Vienna Graduate School of Finance (VGSF) ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Gyongyi Loranth

University of Vienna ( email )

Vienna

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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