Does Profitability Moderate the Relationship Between the Leverage and Dividend Policy of Manufacturing Firms in Nigeria and South Africa?

Ovbe Simon Akpadaka (), Musa Adeiza Farouk, Dagwom Yohanna Dang and Musa Inuwa Fodio
Additional contact information
Ovbe Simon Akpadaka: Financial Management Department, College of Private Sector Accounting, ANAN University, Kwall 930113, Plateau State, Nigeria
Musa Adeiza Farouk: Management Accounting Department, College of Private Sector Accounting, ANAN University, Kwall 930113, Plateau State, Nigeria
Dagwom Yohanna Dang: Public Sector Accounting Department, College of Public Sector Accounting, ANAN University, Kwall 930113, Plateau State, Nigeria
Musa Inuwa Fodio: Vice Chancellor, ANAN University, Kwall 930113, Plateau State, Nigeria

JRFM, 2024, vol. 17, issue 12, 1-18

Abstract: This study examines the moderating role of profitability in the relationship between leverage and dividend policy in listed manufacturing firms in Nigeria and South Africa. Using a sample of 915 firm-year observations from 2013 to 2022, the analysis employs panel Tobit regression to manage the censored nature of dividend data, with logistic regression applied as a robustness check. The findings reveal a negative association between leverage and dividend payout ratio for Nigerian firms, while this association is less pronounced and statistically insignificant in South Africa, reflecting a more flexible financial environment. Profitability strengthens the leverage–dividend policy relationship in Nigeria, enabling firms to maintain dividends despite high leverage; however, this moderating effect is weaker in South Africa. These results underscore the importance of context-specific financial strategies, recommending that Nigerian policymakers improve access to affordable credit, while South African policymakers focus on sustaining market stability. This study advances the understanding of dividend policy in emerging markets by clarifying how leverage and profitability interact to shape dividend practices.

Keywords: dividend policy; leverage; profitability; emerging markets; manufacturing firms (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/17/12/563/pdf (application/pdf)
https://www.mdpi.com/1911-8074/17/12/563/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:17:y:2024:i:12:p:563-:d:1545220

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().