Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria

Ubesie Madubuko Cyril; Emejulu Callistus Emeka; Emejulu Callistus Emeka

doi:doi:10.11648/j.sjbm.20200801.12

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Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria

Ubesie Madubuko Cyril, Emejulu Callistus Emeka, Emejulu Callistus Emeka

Published in Science Journal of Business and Management (Volume 8, Issue 1)

Received: 26 December 2019 Accepted: 8 January 2020 Published: 31 January 2020

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Abstract

The study empirically analyzed the relationship between dividend policy and firm’s financial characteristics with a particular focus to consumer goods manufacturing companies in Nigeria. It utilized annual time series secondary data obtained from annual report and financial statements of the selected firms for the period of ten (10) years (2009-2018). Dividend policy was operationalized by Dividend per Share (DPS) and Dividend Payout Ratio (DPR) while the financial characteristics considered were Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). Ex-post facto research design was adopted while analytical techniques employed were Pearson Product Moment Correlation (PPMC) and Pairwise Granger Causality analysis mechanism. Findings revealed that Dividend per Share (DPS) interacts positively with the selected firm’s financial characteristics while there is a negative and insignificant relationship between Return on Assets (ROA), Return on Equity (ROE), and Dividend Payout Ratio (DPR) of the selected firms. A positive relationship was maintained between DPR and EPS for the period. Meanwhile, the link between ROA and DPS was significant at 5% level. More so, evidence from the pairwise granger causality test revealed that there is no directional relationship between dividend policy and financial performance of consumer goods manufacturing firms in Nigeria. On this background, the study suggested that the financial system be reformed to enhance the operational efficiency of the financial market so as to determine the profitability of quoted firms via the dividend policy channel. It was also recommended that Managers of consumer goods manufacturing firms in Nigeria should ensure that they have well-structured dividend policies in place as this will make the company shares attractive to investors and however lead to increased stock prices and enhanced profitability.

Published in	Science Journal of Business and Management (Volume 8, Issue 1)
DOI	10.11648/j.sjbm.20200801.12
Page(s)	7-15
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Dividend Policy, Profitability, Pearson Correlation, Pairwise Granger Causality, Manufacturing Firm

References

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APA Style

Ubesie Madubuko Cyril, Emejulu Callistus Emeka, Emejulu Callistus Emeka. (2020). Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Science Journal of Business and Management, 8(1), 7-15. https://doi.org/10.11648/j.sjbm.20200801.12

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ACS Style

Ubesie Madubuko Cyril; Emejulu Callistus Emeka; Emejulu Callistus Emeka. Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Sci. J. Bus. Manag. 2020, 8(1), 7-15. doi: 10.11648/j.sjbm.20200801.12

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AMA Style

Ubesie Madubuko Cyril, Emejulu Callistus Emeka, Emejulu Callistus Emeka. Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Sci J Bus Manag. 2020;8(1):7-15. doi: 10.11648/j.sjbm.20200801.12

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@article{10.11648/j.sjbm.20200801.12,
  author = {Ubesie Madubuko Cyril and Emejulu Callistus Emeka and Emejulu Callistus Emeka},
  title = {Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria},
  journal = {Science Journal of Business and Management},
  volume = {8},
  number = {1},
  pages = {7-15},
  doi = {10.11648/j.sjbm.20200801.12},
  url = {https://doi.org/10.11648/j.sjbm.20200801.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjbm.20200801.12},
  abstract = {The study empirically analyzed the relationship between dividend policy and firm’s financial characteristics with a particular focus to consumer goods manufacturing companies in Nigeria. It utilized annual time series secondary data obtained from annual report and financial statements of the selected firms for the period of ten (10) years (2009-2018). Dividend policy was operationalized by Dividend per Share (DPS) and Dividend Payout Ratio (DPR) while the financial characteristics considered were Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). Ex-post facto research design was adopted while analytical techniques employed were Pearson Product Moment Correlation (PPMC) and Pairwise Granger Causality analysis mechanism. Findings revealed that Dividend per Share (DPS) interacts positively with the selected firm’s financial characteristics while there is a negative and insignificant relationship between Return on Assets (ROA), Return on Equity (ROE), and Dividend Payout Ratio (DPR) of the selected firms. A positive relationship was maintained between DPR and EPS for the period. Meanwhile, the link between ROA and DPS was significant at 5% level. More so, evidence from the pairwise granger causality test revealed that there is no directional relationship between dividend policy and financial performance of consumer goods manufacturing firms in Nigeria. On this background, the study suggested that the financial system be reformed to enhance the operational efficiency of the financial market so as to determine the profitability of quoted firms via the dividend policy channel. It was also recommended that Managers of consumer goods manufacturing firms in Nigeria should ensure that they have well-structured dividend policies in place as this will make the company shares attractive to investors and however lead to increased stock prices and enhanced profitability.},
 year = {2020}
}

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TY  - JOUR
T1  - Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria
AU  - Ubesie Madubuko Cyril
AU  - Emejulu Callistus Emeka
AU  - Emejulu Callistus Emeka
Y1  - 2020/01/31
PY  - 2020
N1  - https://doi.org/10.11648/j.sjbm.20200801.12
DO  - 10.11648/j.sjbm.20200801.12
T2  - Science Journal of Business and Management
JF  - Science Journal of Business and Management
JO  - Science Journal of Business and Management
SP  - 7
EP  - 15
PB  - Science Publishing Group
SN  - 2331-0634
UR  - https://doi.org/10.11648/j.sjbm.20200801.12
AB  - The study empirically analyzed the relationship between dividend policy and firm’s financial characteristics with a particular focus to consumer goods manufacturing companies in Nigeria. It utilized annual time series secondary data obtained from annual report and financial statements of the selected firms for the period of ten (10) years (2009-2018). Dividend policy was operationalized by Dividend per Share (DPS) and Dividend Payout Ratio (DPR) while the financial characteristics considered were Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). Ex-post facto research design was adopted while analytical techniques employed were Pearson Product Moment Correlation (PPMC) and Pairwise Granger Causality analysis mechanism. Findings revealed that Dividend per Share (DPS) interacts positively with the selected firm’s financial characteristics while there is a negative and insignificant relationship between Return on Assets (ROA), Return on Equity (ROE), and Dividend Payout Ratio (DPR) of the selected firms. A positive relationship was maintained between DPR and EPS for the period. Meanwhile, the link between ROA and DPS was significant at 5% level. More so, evidence from the pairwise granger causality test revealed that there is no directional relationship between dividend policy and financial performance of consumer goods manufacturing firms in Nigeria. On this background, the study suggested that the financial system be reformed to enhance the operational efficiency of the financial market so as to determine the profitability of quoted firms via the dividend policy channel. It was also recommended that Managers of consumer goods manufacturing firms in Nigeria should ensure that they have well-structured dividend policies in place as this will make the company shares attractive to investors and however lead to increased stock prices and enhanced profitability.
VL  - 8
IS  - 1
ER  -

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Author Information

Ubesie Madubuko Cyril

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria
Emejulu Callistus Emeka

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria
Emejulu Callistus Emeka

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria

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Ubesie Madubuko Cyril, Emejulu Callistus Emeka, Emejulu Callistus Emeka. (2020). Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Science Journal of Business and Management, 8(1), 7-15. https://doi.org/10.11648/j.sjbm.20200801.12

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ACS Style

Ubesie Madubuko Cyril; Emejulu Callistus Emeka; Emejulu Callistus Emeka. Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Sci. J. Bus. Manag. 2020, 8(1), 7-15. doi: 10.11648/j.sjbm.20200801.12

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AMA Style

Ubesie Madubuko Cyril, Emejulu Callistus Emeka, Emejulu Callistus Emeka. Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria. Sci J Bus Manag. 2020;8(1):7-15. doi: 10.11648/j.sjbm.20200801.12

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@article{10.11648/j.sjbm.20200801.12,
  author = {Ubesie Madubuko Cyril and Emejulu Callistus Emeka and Emejulu Callistus Emeka},
  title = {Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria},
  journal = {Science Journal of Business and Management},
  volume = {8},
  number = {1},
  pages = {7-15},
  doi = {10.11648/j.sjbm.20200801.12},
  url = {https://doi.org/10.11648/j.sjbm.20200801.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjbm.20200801.12},
  abstract = {The study empirically analyzed the relationship between dividend policy and firm’s financial characteristics with a particular focus to consumer goods manufacturing companies in Nigeria. It utilized annual time series secondary data obtained from annual report and financial statements of the selected firms for the period of ten (10) years (2009-2018). Dividend policy was operationalized by Dividend per Share (DPS) and Dividend Payout Ratio (DPR) while the financial characteristics considered were Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). Ex-post facto research design was adopted while analytical techniques employed were Pearson Product Moment Correlation (PPMC) and Pairwise Granger Causality analysis mechanism. Findings revealed that Dividend per Share (DPS) interacts positively with the selected firm’s financial characteristics while there is a negative and insignificant relationship between Return on Assets (ROA), Return on Equity (ROE), and Dividend Payout Ratio (DPR) of the selected firms. A positive relationship was maintained between DPR and EPS for the period. Meanwhile, the link between ROA and DPS was significant at 5% level. More so, evidence from the pairwise granger causality test revealed that there is no directional relationship between dividend policy and financial performance of consumer goods manufacturing firms in Nigeria. On this background, the study suggested that the financial system be reformed to enhance the operational efficiency of the financial market so as to determine the profitability of quoted firms via the dividend policy channel. It was also recommended that Managers of consumer goods manufacturing firms in Nigeria should ensure that they have well-structured dividend policies in place as this will make the company shares attractive to investors and however lead to increased stock prices and enhanced profitability.},
 year = {2020}
}

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TY  - JOUR
T1  - Effect of Dividend Policy on Financial Performance of Consumer Goods Manufacturing Firms in Nigeria
AU  - Ubesie Madubuko Cyril
AU  - Emejulu Callistus Emeka
AU  - Emejulu Callistus Emeka
Y1  - 2020/01/31
PY  - 2020
N1  - https://doi.org/10.11648/j.sjbm.20200801.12
DO  - 10.11648/j.sjbm.20200801.12
T2  - Science Journal of Business and Management
JF  - Science Journal of Business and Management
JO  - Science Journal of Business and Management
SP  - 7
EP  - 15
PB  - Science Publishing Group
SN  - 2331-0634
UR  - https://doi.org/10.11648/j.sjbm.20200801.12
AB  - The study empirically analyzed the relationship between dividend policy and firm’s financial characteristics with a particular focus to consumer goods manufacturing companies in Nigeria. It utilized annual time series secondary data obtained from annual report and financial statements of the selected firms for the period of ten (10) years (2009-2018). Dividend policy was operationalized by Dividend per Share (DPS) and Dividend Payout Ratio (DPR) while the financial characteristics considered were Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). Ex-post facto research design was adopted while analytical techniques employed were Pearson Product Moment Correlation (PPMC) and Pairwise Granger Causality analysis mechanism. Findings revealed that Dividend per Share (DPS) interacts positively with the selected firm’s financial characteristics while there is a negative and insignificant relationship between Return on Assets (ROA), Return on Equity (ROE), and Dividend Payout Ratio (DPR) of the selected firms. A positive relationship was maintained between DPR and EPS for the period. Meanwhile, the link between ROA and DPS was significant at 5% level. More so, evidence from the pairwise granger causality test revealed that there is no directional relationship between dividend policy and financial performance of consumer goods manufacturing firms in Nigeria. On this background, the study suggested that the financial system be reformed to enhance the operational efficiency of the financial market so as to determine the profitability of quoted firms via the dividend policy channel. It was also recommended that Managers of consumer goods manufacturing firms in Nigeria should ensure that they have well-structured dividend policies in place as this will make the company shares attractive to investors and however lead to increased stock prices and enhanced profitability.
VL  - 8
IS  - 1
ER  -

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