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Shareholder Litigation Rights and Bank Dividends

Author

Listed:
  • Hiep Ngoc Luu

    (VNU University of Economics and Business
    Institute of Economics and Strategic Management)

  • Tram-Anh Nguyen

    (Institute of Economics and Strategic Management)

  • Dung Thi Thuy Nguyen

    (Institute of Economics and Strategic Management
    Academy of Finance)

  • Lan Thi Mai Nguyen

    (Institute of Economics and Strategic Management
    VinUniversity)

  • Edie Johari

    (Universiti Utara Malaysia)

Abstract

We use the staggered adoption of Universal Demand (UD) laws, which significantly reduces the shareholder litigation rights of listed banks incorporated in 23 US states during the period from 1989 to 2005, as a quasi-natural experiment to examine the impact of shareholder litigation rights on bank dividends. The results of the difference-in-difference analysis show that weakened shareholder litigation rights lead to an increase in bank dividends. Further, we find that the impact of UD laws is only evident for banks with greater agency conflicts and higher information asymmetry. However, we find no evidence that litigation rights affect banks’ share repurchases.

Suggested Citation

  • Hiep Ngoc Luu & Tram-Anh Nguyen & Dung Thi Thuy Nguyen & Lan Thi Mai Nguyen & Edie Johari, 2024. "Shareholder Litigation Rights and Bank Dividends," Journal of Financial Services Research, Springer;Western Finance Association, vol. 66(3), pages 263-295, December.
    • Handle: RePEc:kap:jfsres:v:66:y:2024:i:3:d:10.1007_s10693-023-00397-4
    DOI: 10.1007/s10693-023-00397-4
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