|
Archive@NYU >
Stern School of Business >
Finance Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/28289
|
| Title: | The Role of Banks in Dividend Policy |
| Authors: | Saunders, Anthony
Allen, Linda
Gottesman, Aron
Tang, Yi |
| Issue Date: | 3-Sep-2009 |
| Series/Report no.: | FIN-09-005 |
| Abstract: | We document a significant inverse relationship between a firm’s
dividend payouts and reliance on bank loan financing. Banks limit
dividend payouts to shareholders in order to protect the integrity of
their senior claims on the firm’s assets. Moreover, dividend
payouts decline in the presence of monitoring by relationship banks,
which acts as an effective governance mechanism, thereby reducing the
gains from pre-committing to costly dividend payouts. Bank monitoring
and corporate governance (insider stake and institutional block
holdings) are complementary mechanisms to resolve firm agency problems,
both reducing the firm’s reliance on dividend policy. |
| URI: | http://hdl.handle.net/2451/28289 |
| Appears in Collections: | Finance Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
