The Effects of Corporate Governance Mechanisms on Firms Dividend Payout Policy in Nigeria

Uwuigbe Uwalomwa,Iyoha Francis,Olusanmi Olamide

doi:10.5171/2015.313679

Abstract

This article investigates the relationship between corporate governance mechanisms and the dividend payout policies of firms in Nigeria. To achieve the objectives of this study, a total of 50 listed firms were selected and analyzed for the study using the judgmental sampling technique. Also, the annual reports for the period 2006-2011 were used for the study. The paper was basically modeled to examine the effects of board size, ownership structure, CEO duality and board independence on the dividend payout decisions of firms operating in Nigeria using the regression analysis method. Findings from the study revealed that board size, ownership structure, CEO duality and board independence had a significant positive effect on the dividend payout decisions of the sampled firms. The study therefore concludes that greater proportion of independent directors in a firm provides a positive influence on firms’ dividend payout decisions with a view to reduce the free cash flow.

Highlights

One of the main fundamental issues in corporate finance has been the dividend payout decision of firms, which has always been studied in relation to a firm’s financing decisions
The paper was basically modeled to examine the effects of board size, ownership structure, CEO duality and board independence on the dividend payout decisions of firms operating in Nigeria using the regression analysis method
This study examined the relationship between corporate governance mechanism and the dividend payout policies of firms’ in Nigeria

Summary

Introduction

One of the main fundamental issues in corporate finance has been the dividend payout decision of firms, which has always been studied in relation to a firm’s financing decisions. According to Uwuigbe (2012), dividend policy remains one of the most salient financial decisions from the viewpoint of firms, and from that of the shareholders, consumers, employees and regulatory institutions. It is one of the salient components of firm policies and has been viewed as an interesting issue in the literatures. Firms’ decisions related to dividend policy have been a subject of debate in the financial literatures. It remains one of the most controversial topics and researched areas of corporate finance. According to Black (1976), the harder we look at the

Methods

Findings

Discussion

Conclusion