Open AccessDecision to pay dividends and ownership structures in Nigeria
Author(s) -
Adamu Idris Adamu,
Rokiah Ishak,
Nor Laili Hassan
Publication year - 2020
Publication title -
s and p : sound and pictures
Language(s) - English
Resource type - Journals
ISSN - 1675-722X
DOI - 10.32890/ijbf2019.14.0.9910
Subject(s) - dividend , dividend policy , principal–agent problem , agency cost , sample (material) , stock exchange , business , economics , financial economics , monetary economics , corporate governance , finance , shareholder , chemistry , chromatography
Empirical evidence on how ownership structures influence decision to pay dividends remain unclear in the dividend policy literature. This paper is set to investigate the association between ownership structures and decision to pay dividends. The sample firms of this study consist of non-financial firms listed on the Nigerian Stock Exchange for the period 2011 to 2015 with 270 firm-year observations and logit regression models used to examine the relationship. The study revealed strong evidence that institutional investors were positively related to the decision to pay dividends. However, managerial shareholding was found to have an inverse effect on firms’ probability to pay dividends. Additional analysis was carried out only on dividend payers and the results were also consistent with the hypothesis. Despite this, the managerial investors were somehow weak when the sample was reduced to dividend payers. Cumulatively, the results are robust and show support of the agency theory and hence, imply that institutional investors in Nigeria have preference for dividend payers.