The effect of Managerial Ownership on Dividend Payout of Listed Diversified Conglomerates in Nigeria

Abstract

Theoretically, dividends payments are irrelevant and have no influence on the market value of shares. Thus, a firm can essentially avoid distributing cash (or at least defer payouts for a very long time). But the practices in Nigerian firms are different as some of the companies distribute entire earnings while some retain the entirety. To investigate the rationale of paying dividend, this paper examines the effect of managerial ownership on dividend payout of listed diversified conglomerates in Nigeria. Using annual reports of six (6) firms registered as conglomerates companies on the Nigerian Stock Exchange (NSE) for a period of 10 years (2005-2014). Using panel regression analysis, the study found that managerial ownership had significant relationship with dividend payout for the period examined. The study concludes that managerial ownership has significant positive relationship with the dividend payout of the listed diversified conglomerates in Nigeria. The study recommends that constituents stakeholders such as regulators and investors should encourage managerial ownership in the listed diversified conglomerates in Nigeria as this could improve the efficiency and control over the managers, by reducing the agency problem.