SISTEMA DE REFRIGERACIÓN

The dividend decision of Nigerian companies has been examined by a number of studies (Uzoaga and Alozienwa, 1974; Inanga, 1975: 1978; Soyode, 1976: 1978; Odife, 1977; Okafor, 1983; Izodonmi, 1996; Olowe, 1998; Osuala, 2006; Nnamdi, 2009; Akujuobi and Nnamdi, 2010). However, the empirical work contained in these studies employed different statistical methodologies and arrived at contradictory conclusions. The review in this section divided these prior studies into two: (i) those dealing with the determinants of dividend policy, and (ii) the impact of dividend announcements on share prices.

3.8.1 Determinants of Dividend Policy

A number of prior studies have examined the dividend decision of Nigerian companies using the framework of Lintner (1956). For example, in a study of the dividend policy followed by Nigerian companies on the eve of indigenization, Uzoaga and Alozienwa (1974) reported that the “excessive” dividend payouts which depleted the companies reserves and retained earnings is not in line with the Lintner’s (1956) model where current dividends is influenced by the level of current earnings and the previous dividends. They concluded that fear and resentment seem to have taken over from the classical forces. However, Inanga (1978) and Soyode (1976, 1978) contend that that the determinants of dividend policy in Nigeria were neither clearly identified nor were their relative impacts estimated by Uzoaga and Alozienwa. In particular, Inanga (1978) attributed the change in dividend policy during to the share pricing policy of the Capital Issue Commission (CIC) which seemed to have ignored the classical factors that should govern the pricing of equity share issues.

Oyejide (1976) empirically tested for company dividend policy in Nigeria employing the Lintner’s model as modified by Brittain (1964) and found a statistical significant relationship between current dividends and past year net profits. This finding supports the Lintner’s model of dividend policy. Odife (1977) disagreed with Oyejide (1976) on the ground that the

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study failed to adjust for stock dividends. However, Izedonmi and Eriki (1996) investigated the determinants of dividend policy in publicly listed firms in Nigeria using published financial data from 1984 to 1989. They authors found support for the Lintner’s model of dividend policy.

Adelegan (2003) examined the incremental information content of cash flows in explaining dividend changes, given earnings, using a total of 63 listed companies that generated an 882 firm-year data covering the period 1984 to 1997. The author reported a significant relationship between cash flow and dividend changes. In a similar vein, in a study on the determinants of corporate dividend policy in Nigeria, Osuala (2005) reported that profitability and return on equity affect dividend payments, while Nnamdi (2009) identified the existence of a significant relationship between dividend and current and past earnings, in a study of earning-dividend relationship in Nigeria. These studies therefore provide evidence in support of the notion that Lintner’s model is descriptive of the dividend policies pursued by Nigerian companies.

A more recent study by Akujuobi and Nnamdi (2010) documented that Nigerian firms generally follows the Lintner’s model. Using a regression analysis, the authors evaluated the predictive efficacies of current-and one-year-lagged earnings of 104 publicly listed firms in Nigeria. Their results indicate that dividend payouts are relatively more sensitive to current earnings per share compared to past earnings per share. The authors therefore concluded that the current earnings model is relatively more effective in predicting the dividend payouts of Nigerian listed companies.

In summary, the review of prior studies show that most of these studies made use of aggregated regression analysis in their examination of the dividend decisions in Nigeria. The contradictory finding reported in these studies is therefore due to the different methodologies employed. There is no prior evidence on managerial perspectives on dividend policy in Nigeria. The current thesis attempts to address the ambiguities in prior research by investigating the views of corporate managers who are involved in the administration of dividend policy, using questionnaire and interviews. The thesis also examines how the Nigerian stock market reacts to corporate announcements about dividend payments using the standard event study methodology.

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3.8.2 Relationship between Dividends and Share Prices

The impact of dividend announcements on share prices of Nigerian firms has been examined by a number of studies, albeit relatively few. The first attempt to examine the information content hypothesis of dividend announcements in the Nigerian stock market was made by Olowe (1998). The author investigated the share price reaction to stock dividends in Nigeria around ex-dates from 1981 to 1992 using monthly data. The author reported that share prices react to stock dividends before and after the ex-dates. The author argued that the investors did not anticipate the event, and as a result share prices did not adjust quickly as after the stock dividend announcements. The author concluded that the Nigerian stock market is not efficient in the semi-strong sense. However, a major deficiency of this study is that it failed to take into account other information which could have been announced at the same time as the stock dividend ex-dates.

Adelegan (2009) examined the stock market reaction to the announcements of dividend payments and omissions for 742 announcement dates. The study reported that the mean excess returns are generally negative for all the dividend omission subsamples, but are positive for dividend paying subsamples after the date of the announcement. The author further found that the cumulative excess returns are positive and significant for dividend paying firms, but are negative and statistically significant for dividend omitting firms. The authors therefore concluded that the findings support semi-strong inadequacies of the Nigerian stock market documented by Olowe (1998).

Campbell and Ohuocha (2011) examined whether stock dividend announcements create value for companies traded on the Nigerian stock market, using daily stock returns from 2002 to 2006. Specifically, the authors investigated the nature of the information conveyed by stock dividends in Nigeria by testing the cash distribution and signalling hypotheses. The authors divided their sample period into two based on the timing of the announcements and the frequency with which the announcing shares are traded. Their results suggest that companies that that chose their own announcement date outside the NSE announcement window experience positive abnormal returns if their stock is more frequently traded and negative abnormal returns if their stock is less frequently traded. The authors also found support for both the cash substitution hypothesis and the signalling hypothesis.

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