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Nigeria Journal of Management Sciences (NJMS), Benue State University

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Concentrated Institutional Shareholdings and Dividend Pay-out of Deposit Money Banks in Nigeria

1 Olanrewaju, Olarike Joy
olarike.olanrewaju@gmail.com; 08138033780

2Abdulkadir, Rihanat Idowu (Corresponding Author)
riolaq29@yahoo.com; 08034355144

3 Etudaiye-Muhtar, Oyebola Fatima
fatimaetudaiyemuhtar@yahoo.com, 08033898286

1,2,3 Department of Finance, Faculty of Management Sciences, University of Ilorin, P.M.B. 1515, Ilorin, Kwara State, Nigeria

Abstract

Dividend policy has been regarded as a pivotal issue in corporate finance and could be influenced by several factors. One of such factors is the ownership structure of a firm. Past studies have focused on the impact of institutional ownership on dividend policy decision and concentrated ownership on dividend policy decision in Nigeria, however few studies examined how concentration of institutional investors affect dividend policy. Hence, this necessitate the need for this research to determine if concentrated institutional ownership impact the dividend policy of deposit money banks in Nigeria between 2010- 2015. Data was extracted from the annual reports of the listed deposit money banks and different editions of the NSE fact book. Arellano-Bond/ first difference dynamic panel data Generalized Method of Moments (GMM) estimator was employed. It was found that concentrated institutional shareholdings, earnings and lagged dividend significantly affect the dividend payment of deposit money banks. The findings on concentrated institutional investors' shareholdings and dividend payment support the agency theory but negate the argument of the clientele effect theory. The results conclusively highlight the influence of institutional investors on dividend policy decision in Nigerian deposit money banks. Based on the findings, this study recommends that regulatory bodies like CBN, NDIC, and other complementary body like AMCON should intensify their effort in making the banking industry more attractive to institutional investors through shareholder protection policies as this will in turn facilitate an increase in their shareholdings and this should continuously be used in the interest of the minority investors.

Keywords: Dividend Pay-out, Institutional shareholders, Deposit money banks

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