DIVIDEND POLICY AND FIRM PERFORMANCE IN NIGERIA

This study investigates the determinants of dividend payout in the Nigeria Banking Sector in Nigeria for the period 2015 to 2019. The rationale for the study was based on the realization that rapid economic growth, among others, depends on the robust activities of the banking sector of the economy. Thus, the ordinary least squared econometric technique (OLS) was employed in the analysis of the data; and the empirical findings showed that A positive correlation exists between the ROE, ROA and EPS as performance measures. Thus, an increase in one of them invariably and simultaneously leads to the achievement of the other performance measure; current dividend payout and past dividend payout have a positive and significant influence in the determination of ROE and ROA. In the case of EPS, current dividend payout has a positive and significant influence while that of past dividend is weak; growth opportunity has a positive and significant influence in the performance of firms reflected in the three measures of ROE, ROA and EPS, with the influence on ROE and EPS overwhelming; leverage (ratio of total debt to total capital of firm) has a negative and significant impact on firm performance using ROA, while its influence on ROE and EPS is positive but insignificant; firm’s size has a positive and significant impact in the determination of ROE, while the influence it has on ROA and EPS is negative and significant, and increased cash flow for firm tends to stimulate higher performance as the relationship between cash flow and firm performance is positive (though insignificant). The study recommends that financial managers should institute sound, coherent and efficient dividend policies such that will enable them determine the right dividend policy that will enhance firms’ performance in Nigeria, and appropriate firm disclosure with respect to dividend payout and dividend per share is needed to guard the investing public in making the right investment choices in listed firms.