Abstract
This study examines the underlying components that determine the dividend policy statement of corporations in Nigeria. The study purposively select ninety-four (94) corporations out of the universe of companies listed in the Nigerian Stock Exchange. Financial ratios were extracted and computed from published annual audited financial reports spanning 2007 to 2017. This was informed by the ex-post facto research design adopted to observe key indicators of these corporations in retrospect. The panel regression analysis was used to explain the numerical phenomenon collated. The Durbin-Wu-Hausman specification test found the fixed effect model to be more suitable. The empirical results indicate that financial leverage has a significant negative impact on dividend payout; liquidity has an insignificant positive impact on dividend payout policy; profitability has an insignificant positive impact on dividend payout decision; and company size has a significant positive impact on dividend payout dicision. The study concluses that liquidity, profitability and company size are the determinants of the dividend policy of corporations in Nigeria. More specifically, company size was found to be a major determinant to the dividend policy statement of corporations in Nigeria. The study suggests that, corporations should sustain their liquid positions, asset base and profit levels at all times to meet the universe of desires of their shareholders.
Highlights
The nucleus of every going concern is to maximize the wealth of the owners of the corporation
The adjusted coefficient of determination (R2) indicated that the predictor variables explain about 0.689549 (69%) of variation in the predicted variable. This means that 69% of changes in the dividend payout policy of select companies are caused by financial leverage, liquidity, profitability, and the size of these corporations
The paper set out to examine the determinants of dividend payment decision of corporations in Nigeria
Summary
The nucleus of every going concern is to maximize the wealth of the owners of the corporation. Following the work of Miller and Modigliani (1961), series of academic research have been carried out on firms’ dividend policy. Miller and Modigliani averred that firms’ value is not determined by its dividend payout policy but is rather affected by the investment decisions of the firm under the assumption of certainty in the market. This study set out to examine one of these three pertinent areas; which is to examine the determinants of dividend policy in select corporations in Nigeria. Other measures or determinants showed divergent findings in different studies This varid findings futher gives room to further examine the determinants of dividend policy (though in another sector with recent data) with the hypothesis that the empirical results may swing either way towards giving credence to one of the strands of conclusions in extant literature
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