The propensity to pay dividends among Nigerian listed companies

This study examined the disappearing dividend phenomenon in the Nigerian market from 2003 to 2012. It also investigated the impact of financial crisis on the payout decisions. The dividend pattern was explained using descriptive analysis. Panel logistic regression was employed to explain the determ...

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Main Author:	Idowu, Abdulkadir Rihanat
Format:	Thesis
Language:	eng eng
Published:	2015
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/5220/1/s94258.pdf https://etd.uum.edu.my/5220/2/s94258_abstract.pdf
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id	my-uum-etd.5220
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abdullah, Nur Adiana Hiau Wong, Woei Chyuan
topic	HG Finance
spellingShingle	HG Finance Idowu, Abdulkadir Rihanat The propensity to pay dividends among Nigerian listed companies
description	This study examined the disappearing dividend phenomenon in the Nigerian market from 2003 to 2012. It also investigated the impact of financial crisis on the payout decisions. The dividend pattern was explained using descriptive analysis. Panel logistic regression was employed to explain the determinants of the choice "to pay" or "not to pay" dividends while multinomial logistic regression was used to examine the determinants of four mutually exclusive payout choices. Findings indicate a reduction in the proportion of dividend payers and the amount of dividends paid in the latter years. Determinants of the choice "to pay" or "not to pay" include foreign ownership, retained earnings to total equity, profitability, cash flow and past dividends. Thus, the study supports the clientele effect, free cash flow hypothesis and dividend smoothing hypothesis in explaining the decision "to pay" or "not to pay" dividends. However, the implication stated in the catering theory is not supported in the binomial model. Multinomial estimates revealed that firms alter their payout decisions in line with the necessity to maintain financial flexibility and to mitigate going concern risks during the crisis. Firms with higher leverage and lower cash flows have a higher likelihood to omit dividends during the crisis. Thus, free cash flow and transaction costs hypothesis became relevant during crisis. Clientele effect which was supported in the pre-crisis period became insignificant during the crisis. Catering theory became relevant during crisis as investor's demand for dividends have a positive impact on dividend- increase decisions. In consistency with dividend smoothing hypothesis, results indicate that some firms endeavour to maintain their dividend levels despite the crisis. Profitability as a characteristic of a dividend payer is significant in the crisis and the non-crisis periods. The study found no evidence in support of the implication stated in the life cycle theory
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Idowu, Abdulkadir Rihanat
author_facet	Idowu, Abdulkadir Rihanat
author_sort	Idowu, Abdulkadir Rihanat
title	The propensity to pay dividends among Nigerian listed companies
title_short	The propensity to pay dividends among Nigerian listed companies
title_full	The propensity to pay dividends among Nigerian listed companies
title_fullStr	The propensity to pay dividends among Nigerian listed companies
title_full_unstemmed	The propensity to pay dividends among Nigerian listed companies
title_sort	propensity to pay dividends among nigerian listed companies
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2015
url	https://etd.uum.edu.my/5220/1/s94258.pdf https://etd.uum.edu.my/5220/2/s94258_abstract.pdf
_version_	1747827887258468352
spelling	my-uum-etd.52202021-03-18T08:13:07Z The propensity to pay dividends among Nigerian listed companies 2015 Idowu, Abdulkadir Rihanat Abdullah, Nur Adiana Hiau Wong, Woei Chyuan School of Economics, Finance & Banking School of Economics, Finance and Banking HG Finance This study examined the disappearing dividend phenomenon in the Nigerian market from 2003 to 2012. It also investigated the impact of financial crisis on the payout decisions. The dividend pattern was explained using descriptive analysis. Panel logistic regression was employed to explain the determinants of the choice "to pay" or "not to pay" dividends while multinomial logistic regression was used to examine the determinants of four mutually exclusive payout choices. Findings indicate a reduction in the proportion of dividend payers and the amount of dividends paid in the latter years. Determinants of the choice "to pay" or "not to pay" include foreign ownership, retained earnings to total equity, profitability, cash flow and past dividends. Thus, the study supports the clientele effect, free cash flow hypothesis and dividend smoothing hypothesis in explaining the decision "to pay" or "not to pay" dividends. However, the implication stated in the catering theory is not supported in the binomial model. Multinomial estimates revealed that firms alter their payout decisions in line with the necessity to maintain financial flexibility and to mitigate going concern risks during the crisis. Firms with higher leverage and lower cash flows have a higher likelihood to omit dividends during the crisis. Thus, free cash flow and transaction costs hypothesis became relevant during crisis. Clientele effect which was supported in the pre-crisis period became insignificant during the crisis. Catering theory became relevant during crisis as investor's demand for dividends have a positive impact on dividend- increase decisions. In consistency with dividend smoothing hypothesis, results indicate that some firms endeavour to maintain their dividend levels despite the crisis. Profitability as a characteristic of a dividend payer is significant in the crisis and the non-crisis periods. The study found no evidence in support of the implication stated in the life cycle theory 2015 Thesis https://etd.uum.edu.my/5220/ https://etd.uum.edu.my/5220/1/s94258.pdf text eng public https://etd.uum.edu.my/5220/2/s94258_abstract.pdf text eng public Ph.D. doctoral Universiti Utara Malaysia Abdullahi, D. I., & Yohanna, J. A. (2013). An empirical test of leverage and dividend policy of Nigerian manufacturing firms. Retrieved from http://afra.org.ng/downloads/4.pdf. Aburime, T.U. (2008). Impact of ownership structure on bank profitability in Nigeria. 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