Shareholders’ Preference and Dividend Policy: An Empirical Analysis of Listed Industrial Goods Companies in Nigeria

Aishat Salawudeen, Muhammad Aminu, Isa, Moshoud Yinka Salaudeen


Corporations pay various types of dividend understanding that shareholders belong to a particular group or clientele and prefer a particular policy that suits their purpose. This study investigates cash and stock dividend preferences on dividend per share of listed industrial goods companies in Nigeria using mixed-method research. Sample data were extracted from the Nigerian Stock Exchange (NSC) for a period of twelve years from 2007 to 2018 and a survey research design was adopted for data relating to shareholders' dividend preference as responses were sought from shareholders through questionnaire means. OLS regression analysis was adopted to estimate the two constructs. The result supports bird in the hand theory as a cash dividend, Leverage, and size has a positive significant effect on dividend per share. However, capital gained has negative insignificant, and return on equity has a positive insignificant effect on dividend policy of listed industrial goods companies in Nigeria. This study suggests that cash dividend should be given more priority as a way of boosting the shareholders’ confidence. Also, reasonable outside funds should be maintained to enable diversification as this can boost the profitability of the firms as well as the cash returns to shareholders. These results provide empirical justification for the current economic meltdown in Nigeria as most shareholders' bought sock at high rates which is currently selling at a lower price. To get value on such stock, shareholders will prefer cash dividend because cash dividend is the only way they can get cash from their investment without having to sell off their stocks.

Keywords: Bird–in-the-Hand, Cash dividend, Capital gained, Clientele effect, OLS, Snowball Sample method.

DOI: 10.7176/RJFA/11-24-08

Publication date: December 31st 2020

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