Effect of Corporate Governance and Dividend Policy on Conglomerate Nigeria Firm
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To determine the impact of corporate governance practices of firms in Nigeria on the dividend policy
- To ascertain the relationship between corporate governance and dividend policy on conglomerate Nigeria firm
- To establish the impact of corporate governance measures on financial performance of Nigerian firms
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Concept of Dividend Policy
The term dividend refers to that part of profits of a company which is distributed by the company among its shareholders. It is the reward of the shareholders for investments made by them in the shares of the company. The investors are interested in earning the maximum return on their investments and to maximize their wealth. A company, on the other hand, needs to provide funds to finance its long-term growth. If a company pays out as dividend most of what it earns, then for business requirements and further expansion it will have to depend upon outside resources such as issue of debt or new shares. Dividend policy of a firm, thus affects both the long-term financing and the wealth of shareholders.
As a result, the firm’s decision to pay dividends must be reached in such a manner so as to equitably apportion the distributed profits and retained earnings. A dividend can be regular dividend policy, stable dividend policy and stable Naira dividend plus extra dividend policy. Dividend is the right of shareholders to participate in share of profits and surplus of the company they invested in. The company to ensure that the insurable interest of shareholders is protected should ensure that a fair share of profits and surplus are distributed to investors in return for risks they took in investing The type of dividend policy adopted by a firm can establish record of their profitability; creates confidence among shareholders and aids the company in long-term financing instead of resorting to borrowing. Desai and Foley (2003) argued that researches (Zhou & Ruland, 2006;Yasmin &Ahmed,2008;Li & Zhao,2008) have all tried without success to fathom the dividend routine or determinants of dividend payout policy but findings are still inconclusive on suitable criteria for the observed dividend behavior of organization. The market price is the value of a stock that is presented in stock quotes. These are usually printed in the financial section of a newspaper, and for larger companies, they might bequoted in TV newscasts. Using the Internet, you can quickly access the present market price, as well as historic market prices. You can search for this information on websites such as Google Finance, Yahoo Finance and Bloomberg. Market prices has a correlation with dividend policy adopted by a firm and hence the value of the firm ( Pandey, 2000).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to effect of corporate governance and dividend policy on conglomerate Nigeria firm.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain effect of corporate governance and dividend policy on conglomerate Nigeria firm
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of corporate governance and dividend policy on conglomerate Nigeria firm
Summary
This study was on effect of corporate governance and dividend policy on conglomerate Nigeria firm. Three objectives were raised which included; To determine the impact of corporate governance practices of firms in Nigeria on the dividend policy, to ascertain the relationship between corporate governance and dividend policy on conglomerate Nigeria firm, to establish the impact of corporate governance measures on financial performance of Nigerian firms. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Dangote group of company, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, production managers, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
From research results, we conclude that:
- Corporate governance of Nigerian firms has no impact on the dividend policies of these firms
- Agency conflict is not alleviated by dividend decisions of Nigerian quoted firms as directors are the clique of minority shareholders controlling the firms; and
- Dividend payouts of Nigerian firms are below average indicating the existence of expropriation of funds by director-shareholders, using such as a source of income instead of income from dividend, requiring higher dividend payouts
Recommendation
(i) Shares of family or closely controlled firms should not be traded in the Nigerian capital market because of their poor corporate governance practices
(ii) Firms in the Nigerian capital market should be made to adhere to the shareholding rule of maximum shareholding of 25% to majority shareholders to eliminate close holding of firms with resulting poor corporate governance; (iii) Controlling percentage holding by directors should be divested to reduce their influence on dividend decisions of Nigerian firms
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