Dividend Policy as a Driver of Corporate Growth in Sub-Saharan Africa: Evidence in Nigeria

Abstract

Dividend policy remains an important topic in modern corporate finance. Researchers, managers, and business owners seek to understand the optimal dividend policy. This study examined dividend policy as a driver of corporate growth in sub-Saharan Africa: evidence in Nigeria. The ex-post facto research design was adopted to analyse how dividend policy spur the growth of active insurance companies in the Nigerian Stock Exchange using secondary data of the sampled firms for 2007 – 2018 while utilising descriptive and inferential (regression) statistics in data analysis. The findings reveal that dividend policy in terms of dividend payout has an insignificant negative effect on corporate growth of insurance companies in Nigeria (?= -8.09E-05, p=0.77; Adjusted R2=0.4093; F(4,139)=3.29; p=0.00 with the controlling effect of efficiency, firm age and leverage which have a significant effect on corporate growth of insurance companies in Nigeria. Specifically, the study reveals that efficiency has a significant negative effect on corporate growth (?=-5.29, p<0.05); while firm age discloses a significant positive influence on corporate growth (?=0.417, p<0.05); as leverage exerts a significant negative effect on corporate growth (?=0.052, p<0.05). Therefore, the study concludes that dividend policy does not significantly drive insurance companies' dividend payout growth. The study recommends that insurance companies' management retain more of their profits, improve their efficiency, and control their leverage to further growth.