Talented managers, bank dividend policy and policy uncertainty

ABSTRACT

The paper examines whether bank managers have significant idiosyncratic effects on dividend policy that are not related to bank characteristics. Using the quarterly data of US banks from 2001:Q1–2021:Q2, we document high ably-managed banks tend to pay higher dividends, and this effect is more pronounced amid high policy uncertainty. Our findings remain robust under a battery of robustness tests.

KEYWORDS:

• Dividend policy
• managerial ability
• policy uncertainty
• banks

JEL CLASSIFICATION:

• G21
• G28
• G35

Acknowledgements

Dung V. Tran acknowledges the financial support from the Banking Academy of Vietnam (NNC.07/2023). Dung V. Tran also acknowledges the financial support from the National Foundation for Science and Technology Development (NAFOSTED) (Vietnam).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ In unreported tests, we included additional variables capturing macroeconomic conditions and quarter dummy variables to control for seasonality. We obtained similar findings.