The link between bank monitoring and corporate dividend policy: The case of dividend omissions

Soo Wah Low, Louis Glorfeld, Douglas Hearth, James N. Rimbey

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This study investigates whether bank monitoring influences investor response to a borrowing firm's decision to omit its dividend payments. We establish a new link between the theories of banking and dividend policy in an examination of how bank monitoring and firm dividend signals complement one another to resolve information asymmetries. Results indicate that, for small firms, investors interpret the dividend decision as a function of bank monitoring and the dividend signals taken together. Also reported are the results of tests examining the differences between the monitoring effects of banks versus public and private non-bank lenders.

Original languageEnglish
Pages (from-to)2069-2087
Number of pages19
JournalJournal of Banking and Finance
Volume25
Issue number11
DOIs
Publication statusPublished - Nov 2001

Fingerprint

Bank monitoring
Dividends
Dividend omission
Dividend policy
Investors
Small firms
Banking
Borrowing
Payment
Monitoring
Information asymmetry

Keywords

  • Bank monitoring
  • Dividend omission
  • Dividend signaling
  • Firm size
  • G14
  • G21
  • G35

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

The link between bank monitoring and corporate dividend policy : The case of dividend omissions. / Low, Soo Wah; Glorfeld, Louis; Hearth, Douglas; Rimbey, James N.

In: Journal of Banking and Finance, Vol. 25, No. 11, 11.2001, p. 2069-2087.

Research output: Contribution to journalArticle

Low, Soo Wah ; Glorfeld, Louis ; Hearth, Douglas ; Rimbey, James N. / The link between bank monitoring and corporate dividend policy : The case of dividend omissions. In: Journal of Banking and Finance. 2001 ; Vol. 25, No. 11. pp. 2069-2087.
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