The Impact of Dividend Restrictions on European Banks' Institutional Investors
Title: The Impact of Dividend Restrictions on European Banks' Institutional Investors
Abstract: This paper studies the impact of banks' dividend restrictions on their institutional investors. Using an identification strategy which relies on the within investor variation and a difference in difference setup, I find that funds permanently decrease their ownership shares at treated banks during the 2020 dividend restrictions in the Eurozone. Using data before the introduction of the ban reveals a positive relation between fund ownership and banks' dividend yield, highlighting again the importance of dividends for european banks’ fund investors. This reaction has also pricing implications, since there is a negative relationship between the dividend restriction announcement day cumulative abnormal returns and the percentage of fund owners per bank.