Agency Conflict and Corporate Dividend Policy Decisions in Nigeria

Nwidobie Barine Michael

Asian Economic and Financial Review, 2013, vol. 3, issue 8, 1110-1121

Abstract: Differences in management and shareholders priorities have been recognized and accepted to exist creating problems in the agency to which financial theorists opined that dividend payments is the best means of resolving the conflict. Results obtained using the multiple regression equation model to identify dividend policy determinants of quoted firms in Nigeria showed that solutions to agency problems past dissatisfactory behaviors of shareholders (complaints of shareholders) is not a determinant of current and future dividend decisions while there exists an inverse relationship between the needs and desires of shareholders and the naira dividend paid by the firms. Thus dividend policies of quoted firms in Nigeria are not aimed at solving the existing agency problems in these firms. To resolve the agency problems in quoted firms in Nigeria good corporate governance structure should be enthroned in quoted firms creating better decision structure for dividend; shareholders should be increasingly represented on the board of quoted firms in Nigeria improving on the chance of consideration of their interests in corporate dividend decisions; and the needs of shareholders should be considered in dividend policy design giving them a sense of belonging, increasing satisfaction and reducing agency conflict.

Keywords: Agency theory; Agency conflict; Dividend policy; Investor expectations and shareholders’ satisfaction (search for similar items in EconPapers)
Date: 2013
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