Relationship between Institutional Shareholding and Dividend Payout of Listed Diversified Conglomerate Firms in Nigeria

Abstract

One of the early theoretical predictions in respect of dividends was that dividends payments are irrelevant, and they have no influence on the share price. If there is no influence, a firm can essentially avoid distributing cash (or at least defer payouts for a very long time). However, the practices in Nigerian firms are different as some of the companies distribute entire earnings while some retain the entirety. This study therefore examined the relationship between ownership structure (institutional shareholding) and dividend payout of listed diversified conglomerates in Nigeria. Secondary data of six firms for a period of 10 years (2005-2014) was employed and correlation research design using panel regression technique of data analysis was adopted. The study found that institutional ownership has significant relationship with dividend payout during the period reviewed. The study concludes that ownership structure (institutional shareholding) has significant positive relationship with the dividend payout of the listed diversified conglomerates in Nigeria. The study recommends that the regulators and investors should encourage institutional ownership in the listed diversified conglomerates in Nigeria as this could improve the efficiency and control over the managers by reducing the agency problem.