The Effect of Corporate Taxes on Dividend Policy of Banks in Nigeria

Abstract

The study considers the effect of taxes on the dividend policy of banks in Nigeria. The study was set out to examine the relationship among profit, dividend and taxes and to find out whether profitability and taxes affect the dividends of the nineteen banks quoted in the Nigerian Stock Exchange between 2000 and 2008. The ordinary least square regression analysis was used to test the hypotheses. The analyses of the results show that profitability is a major determinant of the dividend policy as there is significant association between dividend and profitability . Also, taxes have negative and non- significant impact on the dividend policy of the banks. The paper concludes that there are other factors that determine the dividends of Nigerian banks other than profitability and taxes.

Keywords: Dividend, taxes, banks, dividend policy