Payouts and future bank profitability: the role of capital distribution plans

Dimitris Chronopoulos; Edie Erman Che Johari; Anna L. Sobiech; John O. S. Wilson

doi:10.1561/114.00000044

Payouts and future bank profitability: the role of capital distribution plans

Dimitris Chronopoulos, Edie Erman Che Johari, Anna L. Sobiech, John O. S. Wilson

Research output: Contribution to journal › Article › peer-review

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.

Original language	English
Pages (from-to)	361-387
Number of pages	27
Journal	Review of Corporate Finance
Volume	3
Issue number	3
DOIs	https://doi.org/10.1561/114.00000044
Publication status	Published - 26 Jul 2023

Keywords

Banks
Bank regulation
Capital
Dividends
Payouts
Profitability
Repurchases

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Chronopoulos_2023_RCF_Payouts-future-bank_AAM
Copyright © 2023 D. K. Chronopoulos, E. E. C. Johari, A. L. Sobiech and J. O. S. Wilson. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1561/114.00000044 .
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Cite this

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AU - Sobiech, Anna L.

AU - Wilson, John O. S.

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KW - Capital

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KW - Profitability

KW - Repurchases

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Payouts and future bank profitability: the role of capital distribution plans

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