Stakeholder orientation and bank payout policy: evidence from US constituency statutes

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We investigate the impact of stakeholder orientation on bank payout policy. As a quasi-experimental setting, we exploit the staggered enactment of constituency statutes across US states, which broaden the scope of managerial duties to an extended group of stakeholders. The results of a difference-in-differences analysis suggest that bank holding companies (BHCs) incorporated in states enacting constituency statutes experience significant declines in total payouts, which is driven by a decline in share repurchases. This observed decline in share repurchases is stronger for banks with sizeable implicit claims, lower transparency and substantial agency conflicts. These findings remain intact following a myriad of robustness checks and alternative estimation techniques.
Original languageEnglish
JournalBritish Journal of Management
VolumeEarly View
Early online date8 Jul 2022
Publication statusE-pub ahead of print - 8 Jul 2022


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