Abstract
Payment of dividends among firms in Nigeria has become irregular and setting an optimal dividend policy has become an herculean issue. Studies in developed countries indicated that stock liquidity influences dividend payout and this has not been well established in Nigeria. Hence, this study examined the effect of liquid stock on dividend payment of fifty (50) non-financial quoted companies in Nigeria between 2012 and 2019. The study employed secondary source of data collection and analysis was done using descriptive statistics and inferential statistics. The study model expressed the effect of Turnover Ratio, Firm Size, Financial Leverage, Cash Holding and Investment Opportunity on Dividend Payment Ratio using OLS Panel Regression. The results based on the random effect model showed that turnover ratio (TOR) which is a proxy for liquid stock accounts for a significant positive influence on dividend payment while other variables showed negative influence except cash and cash equivalent. Based on the above findings, the study concluded that for most of the companies operating in the non-financial sector of the Nigerian economy, the influence of liquid stock on the amount paid as dividend is positive and significant and those firms with more liquid stocks pay higher amount of dividend than those with less liquid stocks.
Highlights
From the existence of companies, dividend policy has been a herculean issue in corporate finance and as such continues to feature in academic literatures from 1950s till date because in real sense it is a crucial issue for quoted companies (Yusuf [22])
The variables comprises DPRit, turnover ratio (TOR), FAGEit, FINLEV, FS, INVOPP and CH
What influence dividend policy which has been the subjects of several studies using different models, techniques and type of data have all been discussed in the recent literatures in both developing and developed economies
Summary
From the existence of companies, dividend policy has been a herculean issue in corporate finance and as such continues to feature in academic literatures from 1950s till date because in real sense it is a crucial issue for quoted companies (Yusuf [22]). The options available to the quoted companies on how to make use of their earnings has given room for a decision problem on what percentage of this periodical income needs to be shared to investors in the form of dividend (Inyiama, Okwo & Oliver [26]). To support this claim, Nuredin [27] exclaimed that the decision to either plough back earnings in to the operations of the business for expansion purpose or share the earnings among the shareholders has become a quandary being faced by different firms
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