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Proxy solicitation, ownership structure, and bank cash dividends

Author

Listed:
  • Lin, Xiaowei
  • Huang, Hung-Yi
  • Lee, Yun-Chi

Abstract

The system of proxy solicitation is designed to alleviate the agency cost. The cash dividend policy involves the agency problem, which is particularly important in the banking sector. This study examines how proxy solicitation and ownership structure affect bank cash dividends. We find proxy solicitation is positively correlated with dividends, while the interactions between proxy solicitation and ownership structure negatively affect dividends. These results imply proxy statements display shareholder activism to some extent. However, when banks with high CEO, director, and government ownership solicit proxies as a means to smoothly reduce dividends, proxy solicitation becomes inefficient in shareholder activism.

Suggested Citation

  • Lin, Xiaowei & Huang, Hung-Yi & Lee, Yun-Chi, 2023. "Proxy solicitation, ownership structure, and bank cash dividends," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 15-23.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:15-23
    DOI: 10.1016/j.eap.2023.02.004
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    References listed on IDEAS

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    More about this item

    Keywords

    Proxy solicitation; Ownership structure; Banks; Cash dividends; Shareholder activism;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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