Dividend Policy and It’s Determinants in the Non-Financial Sector of the Nigerian Exchange Group

Peter T. Iorshe 1 , Dr. Moses I. Duenya, & Prof. Ioraver N. Tsegba 3
Department of Accounting and Finance, Joseph Sarwuan Tarka University, Makurdi.
Corresponding Author: Iorshe Peter; Email: peteriorshe5@gmail.com

The objective of the study was to examine the determinants of dividend policy of companies listed
on the non-financial sector of the Nigerian Exchange Group. Specifically, the study investigated
the effect of firm age, firm growth and investment opportunities, institutional ownership, and
financial leverage on dividend per share. The population of the study comprised of 69 companies
from the non-financial sector in Nigeria between 2010 and 2019. A sample size of 36 companies
was drawn from the study population with four companies each from the Consumer Goods sector,
Oil and Gas sector, Industrial sector, Agricultural sector, Conglomerate sector, Healthcare
sector, ICT sector, Service sector and Natural resources sector. The study adopted the ex-post
facto research design. Secondary data was employed for this study and sourced from
Machameratios (www.machameratios.company.site). The pooled OLS regression technique was
used for statistical analysis to investigate the determinants of dividend policy based of the
recommendation of the hausman test and wald test and the results of the study showed that firm
age, firm growth and investment opportunities, and institutional ownership are major
determinants of dividend policy among the listed non-financial companies in Nigeria. The results
support the life cycle theory and clientele effect theory. Findings of the study further showed that
firm financial leverage negatively and insignificantly determines dividend policy. The study also
employed the Kruskal Wallis test and Bonferoni test to ascertain whether significant differences
exist in the dividend policies of the non-financial sub-sectors and also rank the sub-sectors in
descending order based on dividend payment respectively. The study’s result therefore, showed
that significant differences exist in the dividend policies of the sampled sub-sectors. The result of
the study further ranked the sampled non-financial subsectors as follows; consumer goods with
the highest dividend pay-out, this is followed by Oil and Gas sector, Industrial sector, Agricultural
sector, Conglomerate sector, Healthcare sector, ICT sector, Service sector and Natural resources
sector. The study, therefore, recommended, among others, that investors (especially institutional
investors) whose main aim is to get dividend on their investment should be guided by the sectors
with the highest level of dividend payment as disclosed above.
Keywords: Determinants, dividend, policy, non-financial sector, Nigerian Exchange Group.

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