DIVIDEND POLICY OF BANK INITIAL PUBLIC OFFERINGS
Wolfgang Bessler*, James P. Murtagh**, and Dona Siregar**
* Justus-Liebig-University Giessen, Germany
** Rensselaer Polytechnic Institute, Troy, NY 12180, USA
Abstract
This paper investigates the short-term valuation effects and the long-run performance
of bank initial public offerings in the United States from 1972 to 1997. Overall, the
empirical results provide significant evidence that the dividend policy of bank IPOs
differ from that of non-banks. The dividend policy of bank IPOs has a significant
impact on the long-run performance. Most importantly, banks that later on were
acquired outperform the benchmark significantly and banks that continue to operate
independently as well as banks that eventually failed both underperform. Moreover,
the beginning of the dividend payment is an important characteristic that separates the
out-performers from the under-performers.
Address: Prof. Dr. Wolfgang Bessler, Center for Finance and Banking, Justus-LiebigUniversity Giessen, Licher Strasse 74, 35394 Giessen, Germany, phone: 49-641-9922460 fax:
49-641-9922469, email: Wolfgang.Bessler@wirtschaft.uni-giessen.de