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Capital Structure and Dividend Policy of Listed Conglomerate Companies in Nigeria: A Panel Data Analysis

Author

Listed:
  • Ahmed Ishaku ACA

    (Department of accounting, Gombe state university)

  • Hirhyel Ibrahim Abba CNA

    (Department of accounting, Gombe state university)

  • Jamila Muktar

    (Department of accounting, Gombe state university)

  • Habib Abdulkarim CNA

    (Department of accounting, Gombe state university)

Abstract

This study examined the relationship between capital structure and dividend policy of listed conglomerate companies in Nigeria. An ex-post facto research design was used because secondary data were extracted from annual report and account of the companies for the period of eight years (2012 – 2019), robust GLS regression analysis was used to analyze the data. The findings revealed that debt to equity ratio has a negative and significant relationship with dividend payout ratio, debt to asset ratio has a negative and significant effect on dividend payout ratio of listed conglomerate companies in Nigeria. Firm size, and age have positive and significant relationship with dividend payout ratio. However, Return on assets (ROA) has a positive but non-significant relationship with dividend payout ratio. The study conclude that debt serve as a monitoring mechanism to the absentee owners, hence its influence on the capital structure of business organization cannot be underestimated because of tax advantages. It is therefore recommended that management should only accept debt covenant that will enable them to pay dividend to shareholders.

Suggested Citation

  • Ahmed Ishaku ACA & Hirhyel Ibrahim Abba CNA & Jamila Muktar & Habib Abdulkarim CNA, 2020. "Capital Structure and Dividend Policy of Listed Conglomerate Companies in Nigeria: A Panel Data Analysis," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(10), pages 295-299, October.
    • Handle: RePEc:bjc:journl:v:7:y:2020:i:10:p:295-299
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    References listed on IDEAS

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    3. DeAngelo, Harry & Masulis, Ronald W., 1980. "Optimal capital structure under corporate and personal taxation," Journal of Financial Economics, Elsevier, vol. 8(1), pages 3-29, March.
    4. Aggarwal, Raj & Kyaw, NyoNyo Aung, 2010. "Capital structure, dividend policy, and multinationality: Theory versus empirical evidence," International Review of Financial Analysis, Elsevier, vol. 19(2), pages 140-150, March.
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