Dynamics of Lintner’s Model in the Dividend Payment Process of Nigerian Banks

Odunayo Magret Olarewaju (), Mabutho Sibanda () and Stephen Oseko Migiro ()
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Odunayo Magret Olarewaju: School of Accounting Economics and Finance, University of KwaZulu- Natal, South Africa.
Mabutho Sibanda: School of Accounting Economics and Finance, University of KwaZulu- Natal, South Africa.
Stephen Oseko Migiro: Graduate School of Business and Leadership, University of KwaZulu-Natal, Westville Campus, South Africa.

SPOUDAI Journal of Economics and Business, 2017, vol. 67, issue 3, 79-94

Abstract: This study examines the dynamics of Lintner’s model using bank-specific panel data from 15 commercial banks listed on the Nigerian Stock Exchange, using the newly introduced dynamic Panel-Auto Regressive Distributed Lag technique for the Period 2006Q01 to 2015Q04. The study findings from the long-run estimates reveal that Lintner’s model holds well, but with a negative effect of profitability on dividend payout of banks in Nigeria during the period in question. The findings further reveal evidence of a co-integrating relationship among past year dividend, profitability, capital adequacy and taxation, and with evidence of unidirectional short-run causality among the variables used to test Lintner’s model and the dividend payout ratio. Based on these findings, this study concludes that dividend process in Nigeria support the information-content-hypothesis’ argument by strict adherence to Lintner’s model in Nigerian banking sector.

Keywords: Dynamics of Lintner’s model; Nigerian banking sector; dividend policy; Panel-ARDL (search for similar items in EconPapers)
JEL-codes: G11 G21 G35 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spd:journl:v:67:y:2017:i:3:p:79-94

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