Payouts and future bank profitability : the role of capital distribution plans
Abstract
We investigate the impact of a change in the regulatory oversight of bank capital distributions on the information content of payouts (dividends, share repurchases) regarding the future level and volatility of profitability of US Bank Holding Companies (BHCs). Using a differential regulatory treatment, which requires large BHCs to obtain prior regulatory approval before enacting payouts to shareholders, we find that an increase in regulatory oversight of bank capital distributions leads to an increase in the information content of dividends (but not share repurchases) with respect to the level (but not the volatility) of future bank profitability.
Citation
Chronopoulos , D , Che Johari , E E , Sobiech , A L & Wilson , J O S 2023 , ' Payouts and future bank profitability : the role of capital distribution plans ' , Review of Corporate Finance , vol. 3 , no. 3 , pp. 361-387 . https://doi.org/10.1561/114.00000044
Publication
Review of Corporate Finance
Status
Peer reviewed
ISSN
2693-9312Type
Journal article
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