DETERMINANTS OF DIVIDEND PAYOUT IN THE NIGERIAN MANUFACTURING SECTOR

Abstract

The study evaluated the determinants of dividend payout ratio of selected Nigerian manufacturing companies. The objectives of this study were to respectively ascertain if corporate tax, firm size, profitability, leverage, liquidity and profitability are significant determinants of dividend payout ratio. Secondary data were extracted from the annual reports from 2007 to 2016 (10 years) of five (5) manufacturing companies listed on the Nigeria Stock Exchange that were purposively sampled and ordinary least squares regression was employed to analyze the data. The results of the analysis revealed that corporate tax (CTAX) and profitability (PROF), although significant, have an inverse relationship with dividend payout ratio (DPO). Leverage (LEV) is significant and positively related with DPO while firm size (FSIZ) and liquidity (LIQ) are insignificant although positively related with DPO. Hence, it was recommended that the tax burden on companies should be such that encourages investment and companies should not incur so much debt in other not to become bankrupt.