The Determinants of Dividend Payout among Listed Banks in Nigeria

MOHAMMED, S. RAMON, ADEMOLA, E. AKINYELE AND OLATUNDE, O. JACOB

Department of Accountancy

The Federal Polytechnic, Ilaro, Ogun State, Nigeria

E-mail : msamuelramon@yahoo.com ; demoladelord2003@yahoo.com

ABSTRACT

This study examines the determinants of dividend payout among Nigerian listed companies in the banking sector. The problem statement was to find out whether the predictor variables (EPS, ROI, NAT, GIT and TAX) have any significant influence on the dependent variable (Dividend Payout). The data used in this research work were sourced from the annual report and financial statements of the five selected quoted banks examined in this study, ranging from year 2001-2010. The data analysis was based on the multiple regression analyses, which measures the correlation and coefficient of determination between the dependent variable (Dividend payout) and the predictor variables. The results revealed that the correlation between the dividend payout and the independent variables (combined) did not have significant influence in determining dividend payout among the selected quoted banks, as the P – VALUE (0.228) of F-test was greater than 5% significance level, and the coefficient of determination (R²) only accounted for 0.14% of the independent variables which was not statistically significant. From the model specified in this study, it was obvious that only Earnings Per Share and Corporate Tax show a positive value, which therefore means that an increase in either of this two variables holding other independent variables constant would increase dividend payout ratio by the same value. Since EPS measures the profitability and growth of an organization, it was however recommended that this should be given topmost attention by ensuring that the wealth of shareholders are maximized, because Nigerian firms not only use dividend payout policy to signal their quality, but also to signal their future prospects.