2 Mars 2015 - Séminaire externe - Laetitia Lepetit - Do ownership structure and asymmetric information matter for dividend payout decisions? Evidence from European banks

Date de publication : 18 déc. 2015 16:03:29

Abstract: We empirically examine whether dividend payout decisions of banks are influenced by their ownership structure and the degree of asymmetric information faced by their outsiders. We find that banks with concentrated ownership have higher payouts than banks with a dispersed ownership structure, in line with the signaling theory of dividends in a context of conflict of interest between controlling and minority shareholders. Further investigations show that the degree of opacity shapes the relationship between ownership concentration and dividend payouts, as banks with a concentrated or a dispersed ownership structure dispense lower dividends when they have high degrees of opacity. These results would be consistent with the entrenchment behavior for banks, with insiders paying lower dividends to extract higher levels of private benefits and then trying to conceal this from outsiders by selectively disclosing information. We further find that a higher level of shareholder protection does not help to constrain such entrenchment behavior. Our findings have critical policy implications for the implementation of Basel 3 with restrictions on dividend payouts.