DETERMINANTS OF DIVIDEND POLICY IN NIGERIA (A STUDY OF MANUFACTURING FIRMS)

DETERMINANTS OF DIVIDEND POLICY IN NIGERIA

(A case Study of Manufacturing Firms)

 

 

 

                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract

This study seeks to examine determinants of dividend policy in Nigeria. The determinants of dividend policy studied are firm size, firm’s performance and liquidity. The study employed the use of secondary data from annual reports whose results were analyzed using the E-views statistical package. The result shows that firm size and firms performance was rated significantly positive at 5% while liquidity of Nigerian manufacturing firms was not significant. The study recommends that; firms listed in the Nigerian stock Exchange observe their policies dealing with these variables in order to ensure that their dividend policy is kept stable because of the key information that it passes to both investors and the general public; it also recommends that companies maintain steady cash flows to enable them meet their cash flow requirements as at when due; that firms listed in the Nigerian stock Exchange manage their operational costs well at the same time optimizing their revenues so as to ensure a stable dividend payout as well as maximizing their shareholders wealth; that firms listed in the NSE balance their firm sizes appropriately to ensure that they attract the right shareholders using the dividend payout, and that the investors in the NSE desiring to earn good returns in the form of dividends on their equity holding they may wish to invest in high profitable firms because they are more likely to pay high dividends irrespective of their sizes.

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Title page                                                                                          i

Certification                                                                                                ii

Dedication                                                                                         iii

Acknowledgement                                                                                      iv

Abstract                                                                                            v

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study                                                           

1.2 Statement of Problem                                                                

1.3 Research Questions                                                                    

1.4 Objectives of the Study                                                              

1.5 Statement of Hypotheses                                                           

1.6 Significance of the Study                                                           

1.7 Scope of the Study                                                                     

1.8 Limitations of the Study                                                            

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Introduction                                                                               

2.2 Conceptual Review                                                                   

2.2.1 Determinants of dividend policy                                             

2.2.2 Types of dividend policy                                                                  

2.2.3 Form of dividend payment                                                     

2.3 Theoretical Review                                                                    

2.3.1 Dividend relevance theories                                                    

2.3.2 Agency theory                                                                         

2.3.3 Bird in hand theory                                                                

2.3.4 Dividends Irrelevance theory                                                  

2.3.5 Tax theory                                                                                

2.4 Empirical Review                                                                       

2.4.1 Profitability                                                                             

2.4.2 Liquidity and dividend policy                                                 

2.4.3 Leverage                                                                                  

2.4.4 Growth                                                                                   

2.5 Summary                                                                                   

CHAPTER THREE: RESEARCH METHOD AND DESIGN    

3.1 Introduction                                                                               

3.2 Research Design                                                                         

3.3 Description of Population of the Study                                               

3.4 Sample Size                                                                               

3.5 Sampling Technique                                                                            

3.6 Sources of Data Collection                                                                  

3.7 Method of Data Presentation                                                     

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND HYPOTHESIS TESTING

4.1 Introduction                                                                               

4.2 Descriptive statistics                                                                           

4.3 Regression results                                                                      

4.4 Testing of hypothesis                                                                 

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATIONS

5.1 Introduction                                                                               

5.2 Summary of Findings                                                                

5.3 Conclusion                                                                                 

5.4 Recommendations                                                                      

References                                                                                        

Appendix I