Empirical Examination of the Determinants of Dividend Payout of Quoted Agro based Firms in Nigeria

Bassey Nsikan Edet, Ikpe Imoh Kingsley and Mfon Efiong Edet
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Bassey Nsikan Edet: Akwa Ibom StateUniversity, Ikot Akpaden, Mkpat Enin, Akwa Ibom State, Nigeria
Ikpe Imoh Kingsley: Akwa Ibom StateUniversity, Ikot Akpaden, Mkpat Enin, Akwa Ibom State, Nigeria
Mfon Efiong Edet: Department of Agricultural Economics and Extension, University of Calabar, Cross River State, Nigeria

Bulletin of Business and Economics (BBE), 2015, vol. 4, issue 4, 223-231

Abstract: This study examines the factors affecting dividend payout of quoted agro-based firms in Nigeria. Data sourced from a sample of 15 agro-based firms for the period 2007-2013 were analyzed using the modified Litner’s model base on Ordinary Least Squares (OLS). Data were first examined for stationarity using the Augmented Dickey Fuller (ADF) test. Result revealed that all the variables were stationary at levels except leverage, liquidity and retained earnings that were stationary at first difference. The OLS result showed that previous dividend, profitability and firm size exerted significant positive influence on dividend payout while firm leverage and business risk exerted significant negative influence on dividend payout. Surprisingly, firm liquidity, Taxes and Retained Earnings failed to explain the variation in dividend payout of these firms. This, therefore, suggest the need to pursue policies that would minimize investment in risky projects, foster dividend payment through the reduction in retained earnings and enhancing firm’s profitability through tax reduction, exemption and rebate as well as discouraging excessive leverage as the way out.

Keywords: Agro-based firms; Dividend payout and liquidity (search for similar items in EconPapers)
JEL-codes: G33 N5 (search for similar items in EconPapers)
Date: 2015
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