Dividend Policy Decision across African Countries

This paper provides analysis of the trends in dividend policy and differentials in firm and country specific factors for payers and non-payers of dividends and examines the predictions concerning the amount of dividends paid by listed non-financial firms in African countries. Using a panel dataset over the period 1994-2011 from 13 African countries, the study found that dividend payers are more profitable, have larger firm size, greater investment, higher retention of earnings and less financial leverage than non-paying firms. The results show that in countries where the GDP per capita is low, firms are more likely to pay dividends. The level of corruption is high for non-payers of dividends. The study also found a positive significant relationship between dividend payout, profitability, investment opportunities and firm size. However, a significant negative relationship was reported between dividend payout, financial leverage, corruption and gross domestic product per capita. The study further found that the dividend trends were very low and stable. The conclusion, therefore, indicates that although firm specific factors are important in Africa in determining dividend policy regarding payout, country specific factors play very significant roles in determining the dividend payout of African firms.