Corporate Governance Practices and Dividend Policies of Quoted Firms in Nigeria

This paper aims to determine the impact of corporate governance of quoted Nigerian firms on the dividend policy of these firms. Sectoral analysis of the dividend payout ratios of 57 quoted firms from13 sectors on the Nigerian stock exchange reveal that Nigerian firms adopt the dividend payout ratios of the industry leader and others the industry average. An impact analysis of corporate governance of these quoted firms on their dividend policies measured by their payout ratios using chi-square shows that corporate governance has no impact on the dividend policies of Nigerian firms as it does in developed economies because in Nigerian firms, shareholder rights are low, firms are controlled by numerical minority director-shareholders who make decisions affecting numerical majority shareholders, agency cost effect of dividend decisions is non-existent as controlling shareholders are also directors, and the rate dividend payout of these firms is an indication of the existence of expropriation of funds by director-shareholders. To redress this situation in Nigerian quoted firms, shares of closely held firms should not be traded on the exchange, maximum shareholding by an individual be the maximum 25%; capital market and firm regulators should verify the accuracy of disclosures to ensure they are not only made to comply with regulations but to instill good corporate governance practices in Nigerian firms.