Determinants of Dividend Policy: Empirical Evidence from Listed Oil and Gas Firms in Nigeria

Abstract

This research initiative intrinsically examined determinants of dividend policy amongst listed oil and gas firms in Nigeria. Specifically, the paper examined the dynamic interactions: past dividend payout (DP (-1)), profitability (PROF), growth opportunities (GRO), leverage (LEV), liquidity (LIQ), firm size (FS), tax policy (TAP) and ownership structure (OS) have on dividend payout (DP). To achieve these specific objectives, the paper sourced data from ten sampled firms from 2007 to 2022, adopting the dividend relevance and irrelevance theories. In terms of methodology, the research adopted the Extended System Generalized Method of Moments (GMM) estimation technique. The research confirmed that past dividend payout, profitability, liquidity, growth opportunity and ownership structure are major positive drivers of dividend payout while higher tax policy and leverage reduce dividend payout. However, firm size has a minimal effect on dividend payout.  Consequent upon the various discerned outcomes, the conclusion drawn is that, past dividend payout, profitability, leverage, growth opportunity, liquidity, tax policy and ownership structure. Thus, the research submits that while policy makers of sampled firms are developing their dividend payout model, they should factor in past dividend payment into the model. Again, the regulators guiding oil and gas firms in Nigeria must insist that sampled firms adhere with the legal restriction on the maximum dividend firms should pay when they declare huge profit. Also, they must as a matter of prominence, insist that the sampled firms pay out dividend from accumulated net profits realized without necessarily disrupting future development goals of the sampled firm.