Corporate Governance and Dividend Policy of Listed Nigerian Deposit Money Banks

The MasterMind Project Ahmed Ishaku 158 PAGES (33758 WORDS) Dissertation
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Abstract x

Companies Board of directors have been largely criticized for the decline in shareholders’ wealth and corporate failure all over the world, they have been in the spotlight for the fraud cases that had resulted in the failure of major corporations, such as Enron and WorldCom. This study examines the effect of corporate governance on the dividend policy of listed Nigerian deposit money banks. The study utilized documentary data collected from annual reports and accounts of the banks for the periods 2004 to 2013. Data was first analyzed by means of descriptive statistics to provide summary statistics for the variables and subsequently, correlation analysis was carried out using Pearson correlation technique for the correlation between the dependent and independent variables. A panel data regression technique was employed since the data has both time series and cross sectional attributes. It was found that almost all the boards of the banks had separate CEOs and Chairmen of their boards and this had positively impacted on dividend payout ratio. Furthermore, while board independence and board meetings have negative effects on dividend payout ratio, managerial equity holdings were found to have positive effects on dividend payout ratio. Ownership concentration and institutional shareholding are found to have positive impact on dividend payout ratio. From the control variables, size was found to be positively related to dividend payout ratio while risk was found to have a negative effect on dividend payout ratio. The study concludes that management equity holdings, ownership concentration and institutional shareholding have positive impact on dividend payout ratio. Thus, recommends that to enhance the level of influence of Corporate Governance on Dividend Payout Ratio to higher level in the Nigerian Banking Industry, Management equity holding should be increased as this will make the management to protect not only their interest but the interest of all stakeholders. 


Table of Contents

DEDICATION ........................................................................................................................... v

ACKNOWLEDGEMENT ......................................................................................................... vi 

ABSTRACT ...................................................................................................................................... x

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study ....................................................................................................... 1

1.2 Statement of the Research Problem ....................................................................................... 5

1.3. Objectives of the Study ........................................................................................................ 8

1.4. Hypotheses of the Study.......................................................................................................8

1.5.Significance of the Study....................................................................................................... 9

1.6. Scope and Limitations of the Study .................................................................................... 10


CHAPTER TWO


LITERATURE REVIEW

2.1 Introduction ........................................................................................................................ 12

2.2 The Concept of Corporate Governance ................................................................................ 12

2.3 Concept of Dividend Policy................................................................................................. 17

2.4 Issues and Challenges to Good CG in Nigeria...................................................................... 19

2.5 Establishing the Dividend Policy in Practice........................................................................ 20

2.5.1 Setting the Target Payout Ratio. ....................................................................................... 21

2.5.2 Summary of factors influencing Dividend Policy. ............................................................. 24

2.6.0 Empirical Studies on Board Characteristics and Dividend policy ...................................... 26

2.6.1 Empirical Studies on Institutional Shareholdings and Dividend policy .............................. 38

2.6.2 Empirical Studies on Ownership Concentration and Dividend policy ................................ 40

2.7 Theoretical Framework ..................................................................................................... 44

2.7.2. Dividend Relevant Theory............................................................................................... 44

2.7.3 Transaction Cost Theory .................................................................................................. 45 viii

2.7.4. Signaling Hypothesis....................................................................................................... 45

2.7.5. Clientele Effect Theory ................................................................................................... 46

2.8 The Nigerian Banking Industry ........................................................................................... 49


CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction ......................................................................................................................... 51

3.2 Research Design.................................................................................................................. 51

3.4 Population of the Study ....................................................................................................... 51

3.5 Sample Size of the Study..................................................................................................... 53

3.6 Sources and Method of Data Collection............................................................................... 53

3.7 Variables of the Study ......................................................................................................... 53

3.7.1 The Dependent Variable and its Measurement .................................................................. 54

3.7.2 The Independent Variables and their Measurement ........................................................... 54

3.7.4 Control Variables ............................................................................................................. 56

3.8 Technique of Data Analysis and Model Specification ........................................................ 58

3.8.1 Descriptive Statistics ........................................................................................................ 58

3.8.2 Correlation ....................................................................................................................... 59

3.8.3 Multiple Regressions........................................................................................................ 59

3.8.4 T-test: Paired Two Sample for Means...............................................................................60


CHAPTER FOUR

RESULTS AND DISCUSSION
4.1 Introduction ........................................................................................................................ 62

4.2 Robustness Test of Independent and Dependent Variables ................................................... 62

4.3 Analysis of Data.................................................................................................................. 66

4.3.1 The effect of Board Characteristics on Dividend Payout Ratio .......................................... 66

4.3.2 Descriptive Statistics ........................................................................................................ 66

4.3.3 Correlation Matrix............................................................................................................ 69

4.3.3 Regression Results on Board characteristics and Dividend Payout Ratio ........................... 72

4.3.3 Regression Results on Ownership Concentration and Dividend Payout Ratio.................... 80

4.3.3 Regression Results on Institutional Shareholding and Dividend Payout Ratio ................... 84

4.4 The Pre and Post CBN CCG 2006 on Dividend Policy of listed Nigerian DMB’s ................ 87

4.5 Implications of the Findings ................................................................................................ 90


CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 SUMMARY........................................................................................................................ 93

5.2 Conclusions ........................................................................................................................ 97

5.4. Frontier for Further Research ........................................................................................... 100

REFERENCES ....................................................................................................................... 101

Appendix B ............................................................................................................................ 136

Appendix C ............................................................................................................................ 140

Appendix D ............................................................................................................................ 146


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APA

The MasterMind, P (2021). Corporate Governance and Dividend Policy of Listed Nigerian Deposit Money Banks. Afribary.com: Retrieved February 24, 2021, from https://afribary.com/works/corporate-governance-and-dividend-policy-of-listed-nigerian-deposit-money-banks

MLA 8th

Project, The MasterMind. "Corporate Governance and Dividend Policy of Listed Nigerian Deposit Money Banks" Afribary.com. Afribary.com, 21 Feb. 2021, https://afribary.com/works/corporate-governance-and-dividend-policy-of-listed-nigerian-deposit-money-banks . Accessed 24 Feb. 2021.

MLA7

Project, The MasterMind. "Corporate Governance and Dividend Policy of Listed Nigerian Deposit Money Banks". Afribary.com, Afribary.com, 21 Feb. 2021. Web. 24 Feb. 2021. < https://afribary.com/works/corporate-governance-and-dividend-policy-of-listed-nigerian-deposit-money-banks >.

Chicago

Project, The MasterMind. "Corporate Governance and Dividend Policy of Listed Nigerian Deposit Money Banks" Afribary.com (2021). Accessed February 24, 2021. https://afribary.com/works/corporate-governance-and-dividend-policy-of-listed-nigerian-deposit-money-banks