Which Firm Characteristics Drive Dividend Policy and Firm Value in the Consumer Goods Sector of the Nigerian Exchange Group?

Abstract

This study investigates the influence of various firm characteristics— institutional ownership, turnover, return on assets, and equity to debt ratio—on firm value and dividend policy within the Consumer Goods Sector of the Nigerian Exchange Group (NGX). Employing a multivariate multiple regression (MMR) approach supplemented by robustness tests, this study leverages a dataset spanning 2013 to 2022 from 16 purposively selected firms. The results indicate that Return on Assets and Equity to Debt Ratio are the most significant and positive predictors for both firm value and dividend policy across the models used in this study. Institutional ownership substantially affects firm value under MMR but failed under simultaneous regression analysis. It is also not a significant dividend policy across models. Turnover, the log of annual sales, does not significantly impact either firm value or dividend policy across models. This study fills a methodological and geographical gap in the literature by adopting MMR, supplemented by robustness tests, and providing sector-specific insights in a developing market, thus offering implications for managers, investors, and regulators.

Keywords: Dividend Policy, Firm Value, Multivariate Multiple Regression, NGX

DOI: 10.7176/RJFA/14-20-06

Publication date: December 31^st 2023