Explanatory factors of bank dividend policy: revisited

Purpose - The purpose of this paper is to examine the Dickens et al. model of bank holding company dividend policy. They identified five explanatory factors in a sample of bank holding companies (BHCs). Banking companies typically pay larger dividends and more often than industrial firms. Investors...

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Bibliographic Details
Published in:Managerial finance 2009-05, Vol.35 (6), p.501-508
Main Authors: Theis, John, Dutta, Amitabh S
Format: Article
Language:English
Subjects:
Accounting
Bank holding companies
Banking industry
Banks
Book value
Business policy
Dividend policy
Dividends
Equity
Holding companies
Independent variables
Insider holdings
Investments
Regional banks
Studies
Variables
Volatility
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Summary:Purpose - The purpose of this paper is to examine the Dickens et al. model of bank holding company dividend policy. They identified five explanatory factors in a sample of bank holding companies (BHCs). Banking companies typically pay larger dividends and more often than industrial firms. Investors often look at the dividends as being important return variables.Design methodology approach - In this study, a sample of 99 firms with 2006 data from governmental reports and Yahoo is used in regression equations to test the relationship of the five identified variables with dividend yields. The analysis is extended to investigate non-linearities between dividend yield and insider ownership.Findings - The paper finds that the original model is robust, but not all variables keep their significance. Insider holdings have a non-linear relationship with dividend yields.Practical implications - The significant factors affecting bank dividend policy help dividend seeking investors find BHCs that return higher dividend yields.Originality value - This paper reveals a non-linear link between insider holdings and dividend yields among BHCs.
ISSN:0307-4358
1758-7743
DOI:10.1108/03074350910956963