Impact of transparency and disclosure on the dividend distribution of Indian banks

Abstract

Abstract This paper seeks to evaluate the influence of transparency and disclosure policies (td) on the dividend distribution decision of Indian banks. Further, it also evaluates the role of shareholder activism (sha) as a moderator on the relationship between td and dividends. To conduct this study, secondary data is collected from all nationalised banks in India for the period 2010-2019. Panel data model (PDM) is employed to analyse this data. This paper finds that: 1) There exists a significant linear association among td and dividend payout decision; 2) There also exists a non-linear association among td and equity dividends; 3) A negative moderating impact of sha is present in the association between td and equity dividends. These findings provide further insights into dividend distribution policy for the banks which would help the researchers, investors and companies working in different economies worldwide. As per our knowledge, no such study has been carried out so far to investigate the non-linear association between the td and dividends and also demonstrate the role of shareholder activism (sha) as a moderator on the relationship among them for banks. Nevertheless, our study has considered only the banking sector and we have only investigated the role of sha as a moderator on the relationship between td and dividends. JEL Classification Code: G21; G34; G38