OWNERSHIP STRUCTURE AND DIVIDEND POLICY OF LISTED MANUFACTURING FIRMS IN NIGERIA

Abstract

In modern corporate finance, dividend policies are one of the most controversial issues. Dividends are paid to equity shareholders to compensate them for investing in the firm and supporting its inherent risks. To maintain shareholder trust, and to finance its growth and expansion, the management must be very vigilant about its profit-sharing policies and the amount of dividends that will be distributed. However, the study examined the effect ownership structure on dividend policy of listed manufacturing firms in Nigeria using panel data collected from the audited annual financial statements of forty (40) listed manufacturing firms for a period of 2019-2023. Ex-post facto research design and the Generalized Least Squares method was used in its estimations. Dividend policy is the dependent variable measured by dividend yield, Ownership Structure is the independent variable measured by Managerial Ownership, Institutional Ownership, Foreign Ownership, and Family Ownership while Firm Size and Leverage are the control variables. The study found that Managerial Ownership, Institutional Ownership, Foreign Ownership, and Family Ownership have significant positive effect on dividend policy of listed manufacturing firms in Nigeria. The study concludes that ownership structure has effect on dividend policy of listed manufacturing firms in Nigeria. However, the study recommends that managements of manufacturing firms in Nigeria should encourage dispersed ownership structure in order to provide effective monitoring roles and reduce managers’ control over the resources in order to pay higher dividends.