Firm Life Cycle Stage and Dividend Payout of Listed Non-Financial Firms in Selected Sub-Saharan African Countries: A Sectoral Analysis

Abstract

This study explored the sector-wise effect of firm life cycle stage on dividend payout of listed non-financial firms in three selected Sub-Saharan African countries that include; South Africa, Nigeria, and Kenya. The study utilized longitudinal and causal research designs. Four hundred and seventy-nine (479) non-financial companies in eleven (11) sub-sectors listed on Nigerian, Johannesburg, and Nairobi Stock Exchanges make up the population. However, the Utility sector was removed from the final analysis because the sample size for this subsector was not enough to carry out the system GMM analysis. Thus, analysis was done for ten (10) subsectors. Two hundred and thirty-nine (239) quoted non-financial firms in ten (10) sub-sectors were chosen and data were collected for the period 2007 to 2017. The dynamic panel data regression technique (system generalized method of moments) was used for the data analysis. The outcomes of the empirical analysis revealed that the earned/contributed capital mix exerts a direct and significant effect on the payout of dividend in seven out of the 10 subsectors analyzed while firm age exerts an inverse and significant effect on the payout of dividend in six out of the 10 subsectors analyzed. The study concludes that the firm life cycle stage influences payout of the dividend of listed non-financial companies in the selected Sub-Saharan Africa countries. The study recommended among others that stock market regulators in the selected Sub-Sahara Africa countries should consider the life cycle stage of the firms and the earned/contributed capital mix should be used in measuring the maturity of firms, thus the payment of dividend by firms should be based on when its profitability and growth rate are expected to fall in future.