Dividend Policy Decision across African Countries

Abstract

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.

Accounting information and dividend payout prediction in Nigerian listed manufacturing firms

“…The finding corroborated the reports of studies conducted in Nigeria by Rihanat et al (2017) and Okoro et al (2018). Also, by Lestari (2018) and Fitri et al (2016) in Indonesia, Jaara et al (2018) in Jordan;Nadeem et al (2018) in Pakistan; Adhikari (2015) in Nepal, and Yensu and Adusei (2016) using African countries. The result negates the findings of Musa (2009) carried out in Nigeria.…”

“…The proportion of distributable profits payable to investors as returns is directly related to the firm's size. Larger firms have tendency to pay higher dividends (Kumar and Sujit, 2018;Jaara et al, 2018;Morakinyo et al, 2018;Yensu and Adusei, 2016;Tahir and Mushtaq, 2016;Yong and Mazlina, 2016;Al-Najjar and Kilincarslan, 2018;Sindhu et al, 2016;Nguri and Jagongo, 2017). Similar but insignificant results were obtained by Gwahula and Mnyavanu (2018), Rihanat et al (2016) and Sindhu (2014) while Gangil and Nathan (2018), Brahmaiah (2018), and Okoro et al (2018), reported an insignificant negative relationship between firm size and dividend decision.…”

Firm Characteristics and Dividend Policy of Quoted Manufacturing Firms in Sub-Sahara Africa

“…[33] who found to have a simultaneous negative impact of leverage on dividends. In the same line [5] showed a negative significant relationship between leverage and dividend policy.…”

“…The differences in the dividend policy in different companies in Africa, has been noticed. Studies such as [3,4,5] have focused on various implications of dividend policy in developing economies particularly in Africa.…”

“…As seen in literatures, majority of the studies have shown that dividend policy behaviors of firms operating in developing economies are significantly different from the dividend policy obtainable in developed markets. However, developing markets are more responsive to some variables, which show the greater financial limitations under which the firms operate [5] Vast studies have been published on dividend policy in developed markets but very few studies have examined dividend policy of listed firms in Africa stock exchange particularly, the sub-Saharan region. This study therefore intends to fill the function by examining whether firm characteristics and factors such as ownership structure, liquidity, firm size, and leverage impact on dividend policy decisions of manufacturing firms quoted in sub-Saharan Africa.…”