Testing the Lintner’s Dividend Model in an Emerging Market: A Dynamic Panel Fixed Effects Analysis of Listed Deposit Money Banks, Food and Beverages Companies in Nigeria
Keywords:
Dividend policy, payout ratio, dividend per share, dynamic fixed effects method
Abstract
Motivated by the conflicting results found by previous studies, this study empirically tests the Lintner’s dividend model and investigating the factors that determine a firm’s payout policy in Nigeria using the dynamic fixed effects method. The study is based on unbalanced panel data obtained at yearly frequency from 18 listed deposit money banks and food and beverages firms in Nigeria, covering from 2013 and 2019. The results show that firm size, profitability and future earnings prospect are the key determinants of dividend per share, while future earnings prospect is the only factor affecting the optimal payout ratio. Contrary to Lintner’s argument, there is evidence that past dividends and current dividends are not significantly related. Also, corporate governance has no significant impact on dividend policy. The implications of these results are discussed in the paper.
References
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8. Gusni, G. (2017). The determinants of dividend policy: A study of financial industry in Indonesia. Jurnal Keuangan dan Perbankan, 21(4), 562 – 574.
9. Jaara, B., Alashhab, H., & Jaara, O. O. (2018). The determinants of dividend policy for non financial companies in Jordan. International Journal of Economics and Financial Issues, 8(2), 198.
10. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.
11. Kaźmierska-Jóźwiak, B. (2015). Determinants of dividend policy: evidence from polish listed companies. Procedia economics and finance, 23, 473-477.
12. Lawal, L., & Onobruke, S. G. (2020). An empirical analysis of determinants of dividend policy: Evidence from Nigeria. AE-FUNAI Journal of Accounting, Business and Finance (FJABAF), 6(1), 119 – 129.
13. Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings, and taxes. The American economic review, 46(2), 97-113.
14. Mehta, A. (2012). An empirical analysis of determinants of dividend policy-evidence from the UAE companies. Global review of accounting and finance, 3(1), 18-31.
15. Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth and the valuation of shares. The Journal of Business, 34(4), 411-433.
16. Morakinyo, F. O., David, J. O., Adeleke, E. O., & Omojola, S. O. (2018). Determinants of dividend policy of listed deposit money banks in Nigeria. World Journal of Finance and Investment Research (International Institute of Academic Research and Development), 3(1), 25-40.
17. Nwidobie, M. B. (2013). Agency conflict and corporate dividend policy decisions in Nigeria. Asian Economic and Financial Review, 3(8), 1110 – 1121.
18. Okpara, G. C. (2010). Asymmetric information and dividend policy in emerging markets: empirical evidence from Nigeria. International Journal of Economics and Finance, 2(4), 212-220.
19. Ranti, U. O. (2013). Determinants of Dividend Policy: A study of selected listed Firms in Nigeria. Manager, (17), 107-119.
20. Uwalomwa, U., Olamide, O., & Francis, I. (2015). The effects of corporate governance mechanisms on firms’ dividend payout policy in Nigeria. Journal of Accounting and Auditing, 2015, 1.
2. Agyemang Badu, E. (2013). Determinants of dividend payout policy of listed financial institutions in Ghana. Research Journal of Finance and Accounting, 4(7), 185 – 190.
3. Alaeto, H. E. (2020). Determinants of dividend policy: empirical evidence from Nigerian listed firms (Doctoral dissertation).
4. Ben Naceur, S., Goaied, M., & Belanes, A. (2006). On the determinants and dynamics of dividend policy. International review of Finance, 6(1‐2), 1-23.
5. Bhattacharya, S. (1979). Imperfect information, dividend policy, and" the bird in the hand" fallacy. The Bell Journal of Economics, 259-270.
6. Dewasiri, N. J., Koralalage, W. B. Y., Azeez, A. A., Jayarathne, P. G. S. A., Kuruppuarachchi, D., & Weerasinghe, V. A. (2019). Determinants of dividend policy: evidence from an emerging and developing market. Managerial Finance.
7. Franc-Dbrowska, J., & Mądra-Sawicka, M. (2020). Determinants of dividend payout dicisions- the case of publicly quoted food industry enterprises operating in emerging markets. Economic research-Ekonomska istraživanja, 33(1), 1108–1129.
8. Gusni, G. (2017). The determinants of dividend policy: A study of financial industry in Indonesia. Jurnal Keuangan dan Perbankan, 21(4), 562 – 574.
9. Jaara, B., Alashhab, H., & Jaara, O. O. (2018). The determinants of dividend policy for non financial companies in Jordan. International Journal of Economics and Financial Issues, 8(2), 198.
10. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.
11. Kaźmierska-Jóźwiak, B. (2015). Determinants of dividend policy: evidence from polish listed companies. Procedia economics and finance, 23, 473-477.
12. Lawal, L., & Onobruke, S. G. (2020). An empirical analysis of determinants of dividend policy: Evidence from Nigeria. AE-FUNAI Journal of Accounting, Business and Finance (FJABAF), 6(1), 119 – 129.
13. Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings, and taxes. The American economic review, 46(2), 97-113.
14. Mehta, A. (2012). An empirical analysis of determinants of dividend policy-evidence from the UAE companies. Global review of accounting and finance, 3(1), 18-31.
15. Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth and the valuation of shares. The Journal of Business, 34(4), 411-433.
16. Morakinyo, F. O., David, J. O., Adeleke, E. O., & Omojola, S. O. (2018). Determinants of dividend policy of listed deposit money banks in Nigeria. World Journal of Finance and Investment Research (International Institute of Academic Research and Development), 3(1), 25-40.
17. Nwidobie, M. B. (2013). Agency conflict and corporate dividend policy decisions in Nigeria. Asian Economic and Financial Review, 3(8), 1110 – 1121.
18. Okpara, G. C. (2010). Asymmetric information and dividend policy in emerging markets: empirical evidence from Nigeria. International Journal of Economics and Finance, 2(4), 212-220.
19. Ranti, U. O. (2013). Determinants of Dividend Policy: A study of selected listed Firms in Nigeria. Manager, (17), 107-119.
20. Uwalomwa, U., Olamide, O., & Francis, I. (2015). The effects of corporate governance mechanisms on firms’ dividend payout policy in Nigeria. Journal of Accounting and Auditing, 2015, 1.
Published
2021-12-04
How to Cite
Sarakiri , J. A. (2021). Testing the Lintner’s Dividend Model in an Emerging Market: A Dynamic Panel Fixed Effects Analysis of Listed Deposit Money Banks, Food and Beverages Companies in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 2(12), 1-9. https://doi.org/10.47494/cajitmf.v2i12.175
Section
Articles
Copyright (c) 2021 James Agbekeme Sarakiri
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