Dividend Decision and Economic Value Added of Quoted Nigeria Manufacturing Firms
Abstract
This study examined the effect dividend decision and economic value added of quoted manufacturing firms in Nigeria. The objective is to examine if dividend decision have any effect on economic valued added of the Nigeria firms. Cross sectional data was sourced from financial statement of 15 quoted manufacturing firms. Economic valued added was proxy for dependent variables while dividend yield, dividend payout ratio, retention ratio and dividend per share were proxy for predictor variables. After cross examination of the validity of the pooled effect, fixed effect and the random effect, the study accepts the fixed effect model. Findings revealed that75 percent variation from the fixed effect results on economic value added of the manufacturing firms. Beta coefficient of the predictor variables found that dividend yield have negative effect on economic value added while dividend per share, dividend payout ratio and retention ratio has positive and significant effect on economic value added of the quoted manufacturing firms. It’s therefore recommend that constant dividend decision should be maintained among the quoted manufacturing firms and retention forms should be properly invested and the investment environment should be well managed to increase economic value added through the dividend decision channel.
References
Agyei, S. K., & Marfo, Y. E. (2011).Dividend Policy and Bank Performance in Ghana, International Journal of Economics and finance, 3(4),23-42.
Ajanthan, A. (2013). The Relationship between Dividend Payout and Firm Profitability: A study of listed Hotels and Restaurant companies in Sir Lanka. Research Journal of Finance and Accounting 4(10), 115-126.
Akani, H. W., & Lucky, A. L., (2015). Econometric analysis of capital adequacy ratios and the impact on profitability of commercial banks in Nigeria. IOSR Journal of Economics and Finance, 6 (6), 11 – 24.
Akani, H. W., & Lucky, A. L., (2016). Capital structure and shareholders’ value of commercial banks in Nigeria: A multi-variate study analysis. IIARD International Journal of Economics and Business Management, 2 (5), 1 – 24.
Anyamaobi, C., & Lucky, A. L., (2017). Corporate characteristics and value creation: A panel data evidence of Nigeria quoted manufacturing firms. World Journal of Finance and Investment Research, 2(1), 31-49.
Azhagaiah, R., & Priya, N.S. (2008).The impact of dividend policy on shareholders’ wealth. International Research Journal of finance and Economic, 3(8), 180-187.
Bell, L.W.W., (1998) Economic profit: an old concept gains new significance. Journal of Business Strategy, 19, 5: 13-15.
Bhattacharya, S., (1979).Imperfect information, dividend policy, and the bird in hand fallacy. The Bell Journal of Economics, 10, (1), 259-270.
Chen, S., & Dodd, J.L., (1977) Economic value added (eva): an empirical examination of a new corporate performance measure. Journal of Managerial Issues, 9, 3: 318-333.
Eniola, O. J. & Akinselure, O.P. (2016).Impact of divided policy and earnings on selected Quoted companies in Nigeria. International Journal of Innovative Research and Development, 5(6), 308-321.
Ezirim, B. C., (2005). Finance dynamics: Principle, techniques and application. Markowitz Centre for Research and Development.
Fathima, T, (2014). Impact of dividend payout on corporate profitability: evident from Colombo stock exchange. Advances in Economics and Business management 1(1), 27-33.
Gordon, M. J. & Shapiro, E. (1956). Capital equipment and analysis: The required Rate of Profit. Journal of Management Science 31, 102-110.
Gordon, M. J. & Lintner, J. (1959).Dividends, earnings and stock prices. Review of Economics and statistics, 4(1), 99-105.
Gordon, M., (1960).The savings, investment and valuation of a corporation. Review of Economics and Statistics, 37-51.
Graham, B., Dodd, D, (1934).Security analysis, 1st edition, McGraw-Hill, New York. International Journal of Economics, Commerce and Management, 3 (4), 1-13.
Gul, S., (2012). The Relationship between Dividend Policy and Shareholders Wealth (Evidence from Pakistan), Economic and Finance Review, 2(2), 55-59.
Ifuero O. O, (2016). Does dividend policy affect firm earning? Empirical evidence from Nigeria. International Journal of Financial Research, 7 (5), 77-86.
Jensen, M. C. (1979). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 7(6), 323-329.
Lee, B. (1996). Causal relations among stock returns, interest rates, real activity and inflation, Journal of Finance, 47, 1591 – 1603.
Lehn, K., & Makhija, A.K., (1997). EVA, Accounting Profits, and CEO Turnover: An Empirical Examination, 1985-1994. Journal of Applied Corporate Finance, 10( 2), 90-97.
Lintner, J., (1996). The Potential Role of Managed Commodity-Financial Futures Accounts (and/or Funds) in Portfolios of Stocks and Bonds. The Handbook of Managed Futures: Performance, Evaluation & Analysis. Ed.
Lucky, A. L., (2017). Cost of capital and corporate earning of quoted firms in Nigeria: A Multi-Dimensional Analysis of quoted firms in Nigeria. Australian journal of finance and banking review, 1(1), 41-65.
M Rabet R., & Bouffat W., (2016). The relationship between dividend policy and firms performances: A study of listed companies in morallo. European Scientific Journal. 12(4), 469-482.
Marshall, T. H. (1920). Reappraising “Social citizenship in the twenty - first century. Journal of Citizenship studies 18, 3-4.
Merekefu, T. M &Ouma, O. P. (2012). Dividend Policy and its impact on firm value: A Review of Theories and Empirical evidence. International Journal of Scientific and Research, 22(2), 2-4.
Miller, M & Modigliani, F (1961) Dividend policy, growth and the valuation of shares. Chicago Journals, 3(4), 411-433.
Momgbe T.G & Ibrahim A.A (2014). Dividend policy on financial performance: A case study of selected Resgistred firms in Nigeria. Research Journal of finance and Accounting 6(20), 1-2.
Nwamaka, O. C., & Ezeabasili, U. (2017). Effect of dividend policies on firm value: Evidence from quoted firms in Nigeria. International Journal of Management Excellence, 8(2).
Ojeme, S, Mamidu, A, I. &Ojo, J. A. (2015). Impact of dividend policy on shareholders wealth: a study on manufacturing industry listed in Nasdaq, America. International Journal of Accounting & Business Management, 4(2), 607-619.
Olowe, R. A.(2011). The impact of 2004 banking capital announcement on the Nigeria stock market.African Journal of Management, 2(2), 180-201.
Onoh, J. K. (2002). Dynamics of money banking and faineance in Nigeria: An emerging market. Astra meridian publishers.
Osegbu, I. F., Ifurueze, M., & Ifurueze, P., (2014).An analysis of the relationship between dividends payment and corporate performance of Nigerian banks. Global Business and Economic Research Journal, 3(2), 75-99.
Osegbue, I. F., et al. (2014).An analysis of the relationship between dividend payment and corporate performance of Nigerian banks.Global Business and Economics Research Journal, 3(2), 75-95.
Oyinlola, O.M., & Ajeigbe, K.B., (2013). The impact of dividend policy on stock prices of quoted firms in Nigeria. International Journal of Economics, Commerce and Management, 11 (9), 1-17.
Pandey, I. M. (2005). Finance management, 9th edition, VIkas Publishing house PVT Ltd.
Peter E.A., & Lyndon M.E., (2016). Dividend payment policy and performances evidence from Nigeria. Social sciences learning education Journal 1(1), 6-9.
Riahi-Belkaeoui, A., (1993). The information content of value added, earnings, and cash flow: us evidence. The International Journal of Accounting, 28(1),140-146.
Rogerson, W.P., (1977). Intertemporal cost allocation and managerial investment incentives: a theory explaining the use of economic value added as a performance measure. Journal of Political Economy, 105,( 4), 770-795.
Salehnezhad, S. H. (2013). A study relationship between firm performance and dividend policy by fuzzy regression Iranian scenario. International Journal of Accounting and Financial Reporting, 3(2), 41-69.
Shapiro, D. (1990). What went wrong? Journal of Corporate Accounting & Finance, 24(4) 49-53.
Simon-Oke P.O., & Ologunwa O.P., (2016).Evaluation of the effect of dividend policy on the performance of corporate firms in Nigeria. FUFA Journal of management and Technology maiden Edition 111-120.
Skinner, D. J. & Soltes, E. (2011). What do dividends tell us about earnings quality?
Spyrou, S. (2001). Stock Returns and Inflation: Evidence from an emerging market. Article in Applied Economic Letters 8(7), 447-450.
Stulz, R., (2000). Merton Miller and modern finance. Financial Management, 29(4), 119–131.
Suranta, E., & Machfoedz, M.,(2003). Analisisstrukturkepemilikan, nilaiperusahaan, investasi, danukurandewandireksi.SimposiumNasionalAkuntansi, 6, 214-226.
Taimi M. E., (2014). Dividend Policy and Its Impact on Firm Value: A Review of taxes. American Economic Review, 60, 1-40.
Timothy, M. M., & Peter O., (2012). The Relationship between Dividend Payout and Firm. Theories and Empirical Evidence, 1-33.
Tiriongo T. K. ,(2004). Dividend Policy Practices of the Companies Listed at the Nairobi Stock. Exchange, Unpublished MBA Project University of Nairobi.
Travlos, W. Trigeorgis, L. &Vafeas, W. (2001). Shareholder wealth Effects of Dividend Policy Changes in an Emerging Stock Market: The case of Cyprus. Multinational Finance Journal, 5(2), 87-112.
Urouigbe U., (2012). Dividend policy and firm performance: A study of listed firms in Nigeria. Accounting and management information system. 11(3), 442-454.
Uwuigbe, U., Jafaru, J., &Ajayi, A., (2012). Dividend policy and firm performance: a study of listed firms in Nigeria. Accounting and Management Information Systems, 11(3), 442-454.
Vogt, R. D. (1994). The source of investment cash flow sensitivity in manufacturing firms: Is it Asymmetric information or Agency Costs?
Walter, J. E., (1963). Dividend policy: its influence on the value of the enterprise. of Economics, Commerce and Management, 11 (9), 1-17.
Wolmarans, H., (2003). Does Lintner’s dividend model explain South African dividend payments? Meditari Accountancy Research 1(1), 243-253.
Yusuf B. R., (2015). Dividend payment and performance of deposit money banks in Nigeria. International Journal of Achiness in management and economics. 4(6), 98-105.
Zhou, P. & Ruland, W. (2006).Dividend payout and future earnings growth. Financial Analysts Journal, 62(3), 58 – 69.
Copyright (c) 2019 Agilebu Ogechi Michael
This work is licensed under a Creative Commons Attribution 4.0 International License.
American Economic & Social Society is licensed under a 